Appeal Details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 9807 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
10 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-03-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
E
Assessment Year
2009-2010
Appeal Filed On
18-05-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 3628 / MUM/20 17 ( ASSESSMENT YEAR : 2009 - 10 ) DCIT 4(3)(2) R.NO.649, 6 TH FLOOR AAYAKAR BHAVAN MUMBAI 400 020 VS. M/S. SUNRISE METALL IC (INDIA) PVT. LTD., SHIVA INDUSTRIAL ESTATE, NEAR TATA POWER HOUSE LAKE ROAD, BHANDUP (W) MUMBAI 400 078 PAN/GIR NO. AAJCS2965E APPELLANT ) .. RESPONDENT ) REVENUE BY V.JUSTIN / SHRI RAJAT MITTAL ASSESSEE BY SHRI SURESH ACH ALIYA DATE OF HEARING 16/03/2018 DATE OF PRONOUNCEME NT 23 / 03 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDER OF CIT(A) - 9, MUMBAI DATED 28/02/2017 FOR A.Y.2009 - 10 IN THE MATTER OF ORDER PA SSED U/S.147 R.W.S. 143(3) OF THE IT ACT. 2. THE ONLY GRIEVANCE OF REVENUE RELATES TO DELETING THE ADDITION MADE ON ACCOUNT OF PURCHASES MADE FROM FIVE PARTIES WHICH WERE DECLARED BY SALES TAX DEPARTMENT AS SUSPICION SUPPLIERS. 3. RIVAL CONTENTIONS HAVE B EEN HEARD AND RECORD PERUSED. 4. FROM THE RECORD WE FOUND THAT THE LEARNED ASSESSING OFFICER ('THE LD. A.O.') REOPENED THE ASSESSMENT FOR AY 2009 - 10 ON THE BASIS OF ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 2 INFORMATION PROVIDED BY THE SALES TAX DEPARTMENT, MAHARASHTRA AND DISSIPATED BY THE INVESTI GATION WING, MUMBAI, FOR PURCHASES MADE BY THE ASSESSEE FROM VARIOUS PARTIES, WHICH HAD BEEN DETERMINED AS HAWALA PARTIES BY THE SALES TAX DEPARTMENT, ONLY BECAUSE THESE FIVE PARTIES HAD NOT PAID VAT COLLECTED ON THE SALES MADE TO THE ASSESSEE . 5. BEFORE T HE AO, ASSESSEE FURNISHED FOLLOWING DOCUMENTS T O SUBSTANTIATE THE GENUINENESS OF THE PURCHASES . 1. PHOTOCOPIES OF PURCHASE BILLS 2. RECONCILIATION OF STOCK STATEMENT SHOWING INWARD & OUTWARD MOVEMENT OF MATERIALS 3. BANK STATEMENTS DEPICTING TRANSACTIONS M ADE BY WAY OF ACCOUNT PAYEE CHEQUES & THROUGH BANKING CHANNEL ONLY 4. LEDGER ACCOUNTS OF PARTIES 5.ITEMWISE QUANTITATIVE DETAILS OF PURCHASES AND SALES. 6. HOWEVER, AO MADE THE ADDITION OF THE PURCHASES ON THE GROUND THAT VAT AUTHORITIES HAVE TREATED THE SALES AS NON - GENUINE SINCE THESE SUPPLIERS HAD NOT PAID VAT ON THE SALES EFFECTED BY THEM . ACCORDINGLY AO MADE ADDITION OF RS.2,16,32,006/ - . 7. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION AFTER OBSERVING AS UNDER: - 6.3.2. I HAVE CONSIDERED THE STA ND OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO CONSIDERED THE JUDICIAL PRONOUNCEMENTS REFERRED AND RELIED UPON BY THE APPELLANT. 6.3.2. THE ADDITION HAS BEEN MADE ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING BASED ON THE INTERNAL INQUIRIES CARRIED OUT BY THE SALES TAX AUTHORITIES, IN RESPECT OF THIRD PARTIES. HOWEVER, THEY WERE NEVER CONFRONTED TO THE APPELLANT. HOWEVER, THE APPELLANT ON ITS PART HAS PRODUCED THE LEDGER ACCOUNT, BILLS/TAX INVOICES ISSUED BY THE SAID PARTIES, AND BANK STATEMENTS SHOWING THAT THE PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL. THERE IS NO EVIDENCE ON RECORD TO PROVE THAT ANY PART OF CASH HAS FLOWN BACK TO THE APPELLANT. ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 3 6.3.3. IN THIS REGARD REFERENCE IS MADE TO THE JUDGMENT OF HON'BLE ITAT IN THE CASE OF PERMIT TEXTILES VS ITO ITA NOS.4012, 4 015 AND 4020 TO 4021/ MUM/ 2012 WHERE THE JURISDICTIONAL ITAT, MUMBAI OBSERVED THAT THERE WAS NO RECORD TO SAY THAT THE PURCHASES MADE BY TH E ASSESSEE WERE BOGUS EXCEPT THE GENERAL STATEMENT RECORDED BY THE DEPARTMENT IN THE CASE OF SHRI RAKESH KUMAR GUPTA, WHICH WAS LATER ON RETRACTED. THE HON'BLE ITAT HELD THAT IN ABSENCE OF ANY ADVERSE MATERIAL BROUGHT ON RECORD, THE ADDITION MADE IN THE C ASE OF ASSESSEE WILL BE BASED ON PRESUMPTION ONLY AND IT CANNOT BE SUSTAINED IN THE EYES OF LAW. (I) THE APPELLANT HAS SUBMITTED THAT DURING ASSESSMENT PROCEEDINGS, THE SALES WERE NOTSUSPECTED. THE APPELLANT HAS CONTENDED THAT THE BOOKS OF ACCOUNTS AS WELL AS SALES HAVE NOT BEEN DOUBTED BY THE AO, AND HENCE THE PURCHASES ARE TO BE HELD AS GENUINE. I FIND THE SAID CONTENTION OF APPELLANT NOT WITHOUT MERIT, SINCE THE AO HAS NOT FOUND ANY FAULT WITH THE QUANTITATIVE INFORMATION OF PURCHASES AND SALES SU BMITTED BY APPELLANT, AND THE AO CANNOT ACCEPT THE ONE LIMB WHILE IGNORE THE OTHER, I FIND THAT IN THE CASE OF CIT VS. NIKUNJ EXIRNP ENTERPRISES(P) LTD[2013] 216 TAXMAN 171 (BOM.), THE JURISDICTIONAL HON'BLE HIGH COURT OF BOMBAY HELD THAT WHERE SALES SUPPO RTED THE PURCHASES AND PAYMENT WAS MADE THROUGH BANKS, MERELY BECAUSE SUPPLIERS HAD NOT APPEARED BEFORE AO, THE PURCHASE COULD NOT BE TREATED AS BOGUS. (II) THE APPELLANT HAS CONTENDED THAT THE SALES TAX DEPARTMENT HAD DISALLOWED THE CLAIM OF INPUT TAX CR EDIT IN HANDS OF THE PURCHASER, AND THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF M/S MAHALAXMI COTTON GINNING PRESSING INDUSTRIES (51 VST 1) HAS DIRECTED THE AUTHORITIES TO PURSUE.RECOVERIES AGAINST THE DEFAULTING SELLING DEALERS. THE APPELLANT HAS FURT HER CONTENDED THAT THE ABOVE PARTIES HAD DEFAULTED IN NOT PAYING VAT IN THE GOVERNMENT TREASURY WHICH DOES NOT MEAN THAT THE PURCHASES FROM THESE PARTIES WERE BOGUS, SINCE THE PARTIES COULD HAVE GIVEN FALSE STATEMENT TO SAVE THEM FROM THE ACTION OF THE SAL ES TAX DEPARTMENT. I FIND THAT THE AO CANNOT MAKE ANY ADDITION JUST ON THE BASIS OF PRESUMPTION. SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF PROOF. THIS PRINCIPLE IS REFLECTED IN THE FOLLOWING JUDICIAL PRONOUNCEMENTS; UMACHARAN SHAW & BROS V. CIT (37 ITR 271) (SC) DHAKESHWARI COTTON MILLS V. CIT (26 ITR 775) (SC) SBEONARAINDULI CHAND V. CIT (72 ITR 766) (ALL.) 6.3.4. IT HAS BEEN EXPLAINED BY THE APPELLANT THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD REQUESTED THE AO TO GIVE THEM COPIES O F ALL THE MATERIALS/ INFORMATION/EVIDENCES, ON THE BASIS OF WHICH THE AO HAS FORMED HIS OPINION TO MAKE DISALLOWANCE OF ABOVE REFERRED PURCHASES. HOWEVER, NO SUCH ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 4 MATERIALS WERE SUPPLIED TO THE ASSESSEE BEFORE USING THE SAME AGAINST IT. THE SUBMISSION OF T HE APPELLANT IS THAT THIS WAS A CLEAR VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THEREFORE THE ADDITION MADE BY THE AO AND THE IMPUGNED ASSESSMENT ORDER IS UNCONSTITUTIONAL AND VOID. THE APPELLANT HAD SUBMITTED COPIES OF PURCHASE BILLS, LEDGER A/C, BAN K STATEMENTS REFLECTING ENTRIES OF PAYMENTS MADE FOR THE ABOVE PURCHASES TO THE ABOVE REFERRED PARTIES. THE AO HAS ALSO EXAMINED THE SAME. HOWEVER, NO INFIRMITY HAS BEEN POINTED OUT. THE EVIDENCES ADDUCED BY THE APPELLANT HAVE NEITHER BEEN DISPROVED NOR AN Y CONCRETE DOCUMENTARY EVIDENCE HAS BEEN BROUGHT AGAINST THE ASSESSEE WHICH MAY SUBSTANTIATE ALLEGATION OF BOGUS PURCHASES. THUS, IT IS A CASE WHERE THE PURCHASES FROM ABOVE PARTIES HAVE BEEN TREATED AS BOGUS FOR NO OSTENSIBLE, LAWFUL AND ANY COGENT REASON . THUS, IT IS A SIMPLE CASE WHERE THE AO HAS MADE THE DISALLOWANCE BECAUSE THE SALES TAX DEPARTMENT, MAHARASHTRA HAS DECLARED THESE PARTIES TO BE SUSPICIOUS HAWALA DEALERS. 6.3.5. THE ABOVE REFERRED PURCHASES FROM THE SAID PARTIES CANNOT BE HELD AS BOGUS S OLELY ON THE BASIS OF SALES TAX DEPARTMENT ALLEGING THEM TO BE SUSPICIOUS HAWALA DEALERS. THE INCOME TAX ACT 1961 IS A SELF - CONTAINED CODE AND THE ASSESSMENT HAS TO BE FRAMED AS PER THE LETTER AND SPIRIT OF SAID INCOME TAX ACT 1961. WHILE MAKING SUCH ASSES SMENT THE AO IS DUTY BOUND TO EXAMINE ALL RECORDS AND EVIDENCES ARE TO BE EXAMINED AND A RATIONAL JUDGMENT HAS TO BE FORMED THEREON, WHICH IS LACKING IN THE PRESENT CASE. IT IS THE CASE OF THE APPELLANT THAT THE AO HAS NOT GIVEN ASSESSEE TO CROSS - EXAMINE T HE SAID PARTIESJ HAS NOT SEEN BOOKS OF ACCOUNTS, BANK STATEMENTS, SALES TAX RETURNS FILED BY THE ALLEGED SUSPICIOUS HAWALA DEALERS AND THEIR INCOME TAX RETURNS, THEIR AUDIT REPORTS ETC. THUS WITHOUT EVEN SEEING THEIR DOCUMENTS, IT HAS BEEN PRESUMED THAT TH EY ARE BOGUS DEALERS AND NOT DOING ANY BUSINESS AS THE SALES TAX DEPARTMENT HAS DECLARED THEM TO BE SUSPICIOUS HAWALA DEALERS AND O N THE BASIS OF SUCH PRESUMPTIONS, THE AO TREATED THE ABOVE REFERRED PURCHASES FROM THE SAID DEALERS AS BOGUS PURCHASES AND AD DED THE SAME TO TH E INCOME OF THE ASSESSEE. IN FACT , THERE IS NO WHISPERS IN THE ASSESSMENT ORDER THAT THE AO HAS SEEN THE RECORDS OF SUCH DEALERS; HENCE ANY QUESTION OF APPLICATION OF MIND THEREON AND FORMING A RATIONAL JUDGMENT BASED ON SUCH RECORDS, DOE S NOT ARISE AT ALL IN THE PRESENT CASE. THUS, THE ADDITION IS MADE WITHOUT APPLICATION OF MIND SOLELY ON THE BASIS OF ASSUMPTIONS, PRESUMPTIONS AND PRECONCEIVED NOTIONS WITHOUT CONCRETE SUBSTANCE. THE SAID ADDITIONS, THEREFORE, CANNOT BE SUSTAINED. TO PUT IT IN OTHER WORDS, WHATEVER BE THE BASIS UPON WHICH THE AO HAS FORMED OPINION TO MAKE DISALLOWANCE OF ABOVE PURCHASES BECAUSE ANY CONCRETE THE BASIS OF ADDITION EXCEPT MERE STATEMENT OF SUSPICIOUS ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 5 DEALERS BEFORE SALES - TAX AUTHORITIES, WERE NOT SUPPLIED TO THE ASSESSEE FOR EFFECTIVE COUNTERING. SIMILARLY, COPIES OF RETURN OF INCOME, PROFIT & LOSS A/C, BANK STATEMENTS AND COPY OF LEDGER ACCOUNT IN THE BOOKS OF ACCOUNTS OF SUCH SUSPICIOUS DEALERS HAVE NOT BEEN REQUISITIONED BY THE AO AND PUT ACROSS ASSESSEE F OR CROSS - VERIFICATION OR REBUTTAL. SINCE THESE WERE NOT PROVIDED TO THE APPELLANT BY THE AO, THIS HAS LED TO VIOLATION OF NATURAL JUSTICE AND NON - PROVIDING OF OPPORTUNITY FOR CROSS - EXAMINATION AND COUNTERING THE CONCLUSIONS OF SALES - TAX DEPARTMENT OF GOVT. OF MAHARASHTRA AS WELL AS THE ALLEGED SUSPICIOUS DEALER. 6.3.6. IT HAS BEEN VEHEMENTLY ARGUED BY THE ASSESSEE THAT THE AO DID NOT APPRECIATE THE EVIDENCE ADDUCED BY THE APPELLANT TO SUBSTANTIATE HIS PURCHASES FROM THE SAID PARTIES, INCLUDING DETAILS SU CH AS DETAILS OF BILL - WISE PURCHASES; LEDGER ACCOUNTS OF THE PARTIES IN QUESTION; COPIES OF ALL PURCHASE INVOICES AND DELIVERY CHALLANS OF ALL THE PARTIES, COPIES OF BANK STATEMENTS SUBSTANTIATING PAYMENTS MADE BY THE ASSESSEE TO THE PARTIES IN QUESTION, A ND VARIOUS OTHER DOCUMENTS AND DETAILS SUBSTANTIATING OUR PURCHASES FROM THE PARTIES IN QUESTION. SINCE THE ABOVE EVIDENCES ARE PRIMARY EVIDENCES AND THE AO HAS TO EITHER ACCEPT THEM OR POINT OUT IRREGULARITIES WITH CONCRETE AND LEADING EVIDENCES, THESE C OULD NOT / HAVE BEEN COMPLETELY BRUSHED ASIDE. 6.3.7. IN VIEW OF THE ABOVE FACTS AND SUBMISSIONS AND IN VIEW OF THE FACT THAT THE ASSESSEE HAS SUBMITTED ALL THE DOCUMENTS SUBSTANTIATING ITS PURCHASES FROM THE ABOVE PARTIES TO THE AO, SHOWING THE : TRANSACTION OF GOODS PURCHASED INCLUDING THE GOODS PURCHASED FROM THE SAID PARTIES IN QUESTION, BUT THE SAID EVIDENCES HAVE BEEN IGNORED AND ADDITIONS HAVE BEEN MADE TO THE INCOME OF THE APPELLANT . 6.3.8. THAT THE ONLY REASON FOR TREATING THE PURCHASES FR OM THE ABOVE PARTIES AS BOGUS IS MERELY THE SO - CALLED DECLARATION/ AFFIDAVITS OF THE ALLEGED HAWALA DEALERS AND FOR NON PRODUCTION OF THE PARTIES BEFORE THE AO. THE ASSESSEE HAS EXPLAINED THAT SINCE FILLING AFFIDAVIT BY ABOVE SUSPICIOUS DEALERS COULD BE IN FACT MORE BENEFICIAL TO SUCH HAWALA DEALERS BECAUSE BY DOING SO, SUCH DEALERS WILL IN FACT BE SAVING VAT AMOUNT AND PAY HARDLY ANYTHING TO SALES - TAX DEPARTMENT AND SO JUST BECAUSE THEY HAVE NOT PAID THE VAT, IT IS BETWEEN THEM AND GOVT. OF MAHARASHTRA AND THE ASSESSEE CANNOT BE MADE A SCAPEGOAT TO SUFFER ON ACCOUNT OF THEIR FAULT. 6.3.9.IN THE PRESENT CASE, THE APPELLANT HAS NOT BEEN GIVEN OPPORTUNITY TO CROSS - EXAMINE THE THIRD PARTY WHO ARE ALLEGED TO BE SUSPICIOUS/HAWALA DEALERS. I) IN R W PROMOTIONS P LTD. VS. ACIT(ITA NO. 1489 OF 2013) DECIDED ON ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 6 13/07/2015, THE BOMBAY HIGH COURT HAS HELD THAT THE AO MUST GIVE AN OPPORTUNITY TO CROSS EXAMINE THE WITNESS WHOSE STATEMENTS IS RELIED UPON BY THE REVENUE AND VIOLATION OF THIS IS CLEARLY A BREACH OF PRINCIP LES OF NATURAL JUSTICE AND ANY ORDER PASSED IN BREACH OF NATURAL JUSTICE IS UNSUSTAINABLE. IN THE CASE OF THE APPELLANT, THE AO HAS RELIED UPON THE SO - CALLED STATEMENT OF THE ABOVE SUPPLIERS TO TREAT THESE PURCHASES FROM THE ABOVE PARTIES AS BOGUS AND THA T TOO WITHOUT GIVING IT COPIES THEREOF AND WITHOUT AFFORDING IT ANY OPPORTUNITY TO CROSS EXAMINE THEM. THUS, THE ACT OF TREATING THE PURCHASES FROM THE ABOVE PARTIES AS BOGUS BY THE AO IS IN DEVOID OF PRINCIPLES OF NATURAL JUSTICE AND HENCE VOID. II) STAT EMENT OF HAWALA DEALERS WERE MADE BEHIND THE BACK OF THE APPELLANT. THAT THE MAIN REASON FOR MAKING DISALLOWANCE OF PURCHASES FROM THE SAID PARTY CLAIMING THE SAME TO BE BOGUS PURCHASES ARE BASED ON THE LIST OF HAWALA DEALERS PARTY AS PER THE DEPARTMENT. T HE SAID PARTIES HAVE BEEN TREATED AS HAWALA DEALERS ON THE BASIS OF INFORMATION AND MATERIALS COLLECTED THE BACK OF THE ASSESSEE. THE SAID INFORMATION AND MATERIALS HAVE BEEN USED AGAINST THE ASSESSEE, THAT TOO, WITHOUT GIVING ANY COPY THEREOF AND WITHO UT GIVING IT ANY OPPORTUNITY TO CROSS EXAMINE THE SAID PARTIES. THE IMPUGNED ASSESSMENT ORDER IS THEREFORE IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND HENCE BAD IN LAW ON THAT SCORE ALONE. III) THE APPELLANT HAS ASKED FOR COPIES OF VARIOUS RELEVANT DOCUMENTS FOUND BASIS OF ADDITION. HOWEVER, THE AO HAS CHOSEN TO PROCEED WITHOUT PROVIDING COPY OF ANY SUCH DOCUMENTS. THE AO HAS CHOSEN TO BELIEVE THE STATEMENTS OF SUSPICIOUS DEALERS TO BE SACROSANCT WHICH WAS TAKEN BEHIND THE BACK OF THE ASSESSEE BY THE SALES - TAX AUTHORITIES, WHILE IGNORING THE DOCUMENTS ADDUCED BEFORE HIM/HER BY THE ASSESSEE. IV) THE COURTS HAVE LAID DOWN THAT WHILE THE AO HAS FULL FREEDOM TO COLLECT EVIDENCES 'ON THE BACK' OF THE APPELLANT, HIS/HER RIGHTS TO USE SUCH MATERIAL IN THE A SSESSEE ORDER IS NOT UNFETTERED. BEFORE USING SUCH MATERIAL GATHERED THROUGH PRIVATE ENQUIRY IN THE ASSESSMENT, THE SAID MATERIAL HAS TO BE DISCLOSED TO THE ASSESSEE, HIS SUBMISSIONS HAVE TO BE TAKEN ON RECORD AND IF A THIRD PARTY HAS BEEN EXAMINED, THE AS SESSEE SHOULD GET AN OPPORTUNITY TO CROSS EXAMINE SUCH PARTY SO THAT ALL SIDES OF THE QUESTION ARE PROPERLY BROUGHT ON RECORD. THESE RIGHTS OF THE ASSESSEE ARE BASED ON THE CONCEPT OF NATURAL JUSTICE. IN THIS REGARD, REFERENCE IS MADE TO AND RELIANCE IS P LACED ON - I) KISHANCHANDCHELLARAMVS CIT 125 ITR 713 (SC), II) CIT VS EAST COAST COMMERCIAL CO. LTD. 63 ITR 449 (SC) III) C. VASANTLAL AND CO. VS CIT 45 ITR 206 (SC) AND IV) DHAKESHWARI COTTON MILLS LTD. VS. CIT 26 ITR 75 (SC). ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 7 IN VIEW OF ABOVE JUDICIAL PR ONOUNCEMENTS, ANY ASSESSMENT PASSED IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE IS VOID IN THE SCORE ALONE. IN THE CASE OF SAGAR BOSE VS ITO 561 (KOLKATTA), THE HON'BLE KOLKATA ITAT HAS DELETED THE ADDITION MADE ON THE BASIS OF INQUIRIES MADE BEHIND THE BACK OF THE ASSESSEE WITHOUT GIVING HIM OPPORTUNITY TO REBUT IT. THE HON'BLE IT AT, KOLKATA IN THE CASE HELD AS UNDER : 'THE FINDINGS OF THE ASSESSING OFFICER THAT PAYMENT BY ACCOUNT PAYEE CHEQUE DID NOT PROVE THE GENUINENESS OF THE TRANSACTION, WAS NEIT HER CORRECT NOR TENABLE. NO ENQUIRY FROM THE BANK AUTHORITIES TO FIND OUT THE FINAL DESTINATION OF MONEY AND ESTABLISH THE IDENTITY OF THE PERSONS BEHIND THAT SCENARIO WAS MADE BY THE ASSESSING OFFICER. AS PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES, THEY WERE CERTAINLY DEPOSITED IN SOME BANK ACCOUNTS WHICH WERE OPENED, MAINTAINED AND OPERATED BY SUPPLIERS OR BY SOME OTHER PERSONS AND AMOUNT WAS CREDITED IN THOSE ACCOUNTS. WHO WERE THE PERSONS WHO OPERATED THE ACCOUNTS, WHO INTRODUCES THEM TO THE BANK, WHO DEPOSITED THESE ACCOUNT PAYEE CHEQUES AND WHO WAS WITHDRAWING AND ENJOYING THE MONEY AND WHETHER THESE PAYMENTS HAD REVERTED BACK TO THE ORIGINATOR, COULD VERY EASILY BE KNOWN TO THE DEPARTMENT. A THOROUGH ENQUIRY AND DEEP INVESTIGATIONS WOULD HAVE REVEAL ED THE TRUTH, BUT UNFORTUNATE!}/ THE DEPARTMENT HAD FAILED TO DO SO AND, THEREFORE, THE ASSESSING OFFICER WAS NOT AUTHORIZED TO TREAT THE PURCHASES AS BOGUS WITHOUT PROPER ENQUIRY AND INVESTIGATION AND WITHOUT REACHING THE LOGICAL CONCLUSION. THE FINDING OF THE ASSESSING OFFICER THAT SALES TAX REGISTRATION NO. HAD NOTHING TO DO TOWARDS THAT END WAS ALSO NEITHER CORRECT NOR TENABLE. THE SALES - TAX REGISTRATION NOS. WERE PRINTED ON THE BILLS. SO IT WAS THE BOUNDED DUTY OF THE ASSESSING OFFICER TO ENQUIRE FRO M THE SALES - TAX DEPARTMENT AS TO WHETHER THOSE SALES TAX REGISTRATION NOS. WERE ALLOTTED TO NON - EXISTENT PERSONS OR EXISTING ONES AND WHETHER THE SALES TAX WAS COLLECTED AND DEPOSITED AND DEPOSITED INTO THE GOVERNMENT EXCHEQUER OR NOT, AND IF YES, BY WHOM SUCH AN INQUIRY SHOULD HAVE BEEN MADE BY THE DEPARTMENT IN ORDER TO KNOW THE TRUTH, FAILURE TO DO SO ON THE PART OF THE ASSESSING OFFICER INDICATED THAT HIS OBSERVATIONS AND FINDINGS IN RESPECT OF SALES TAX REGISTRATION NOS. WERE NOT BASED ON SOLID MATERIA L AND COGENT EVIDENCE. THE ASSESSEE HAD FURNISHED ALL THE DETAILS AND PARTICULARS OF PURCHASE AND SALES ITEM - WISE, AMOUNT - WISE, QUANTITY - WISE, QUANTITY - WISE, STOCK FOLIO - WISE AND HAD LINKAGE AND CORRELATION BETWEEN THE PURCHASES AND SALES. THE ASSESSEE HA D EXPLAINED THAT GOODS WERE PURCHASED, MATERIALS WERE CONSUMED AND THEREAFTER RESPECTIVE SALES WERE EFFECTED BUT THE ASSESSING OFFICER/HAD REJECTED THIS CONTENTION ONLY ON THE GROUND THAT AS SELLER NON EXISTENT, THERE COULD NOT HAVE BEEN ANY ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 8 PURCHASES. T HE ASSESSING OFFICER HAD NOT ANALYSED DATA AND FIGURES OF PRODUCTION WITH REFERENCE TO THE STOCK REGISTER AND PURCHASES, PRODUCTION AND SALES, ETC., IN ORDER TO CORRELATE THE PURCHASES AND PRODUCTION ON ONE HAND AND THE SALES AND STOCK ON THE OTHER. WHETHE R SUCH CORRELATION AND LINKAGE EXISTED BETWEEN PURCHASE AND PRODUCTION ON ONE HAND AND SALES ON THE OTHER WAS COMPLETELY BY THE ASSESSING OFFICER. FURTHER, THE ASSUMPTION THAT THE ASSESSEE HAD CONCEALED STOCK WAS NOT BASED ON ANY MATERIAL AND EVIDENCE. AS ALL FIGURES REGARDING THE OPENING STOCK PURCHASES, SALES AND CLOSING STOCK OF RAW MATERIALS AND FINISHED GOODS WERE AVAILABLE IN THE AUDITED ACCOUNTS, THE ASSESSING OFFICER SHOULD HAVE CALCULATED AND ARRIVED AT THE EXACT FIGURE OF CONCEALED STOCK SAID TO HAVE BEEN IN THE POSSESSION OF THE ASSESSEE BUT THE ASSESSING OFFICER HAD FAILED TO DO SO. IN THIS CASE THE OPENING STOCK OF FINISHED GOODS WAS RS.570 AND THE CLOSING STOCK WAS NIL AND THE ASSESSING OFFICER HAD NOT DISTURBED THEM. HAVING ONCE ACCEPTED SUCH OPENING STOCK AS CLOSING STOCK IN THE ASSESSMENT YEAR 1989 - 90 AND CLOSING STOCK OF NIL AS OPENING STOCK IN SUBSEQUENT ASSESSMENT YEAR, I.E., 1991 - 92, THE REVENUE WAS NOT AT LIBERTY TO ESTIMATE THE STOCK AGAIN ON PRESUMPTION AND SURMISES. THE ASSESSING OFF ICER HAD ADMITTED THAT THERE WAS UNDISPUTED PURCHASES AND OPENING STOCK AND THE ASSESSEE COULD CONSUME THE SAME AND COULD SELL THE GOODS. IF THE FIGURES PERTAINING TO OPENING STOCK, PRODUCTION AND UNDISPUTED PURCHASES WERE TOTALED UP THEY WORKED OUT TO RS. 2,17,034 AS AGAINST THE SALES OF RS.10,95,180. WITHOUT GENUINE PURCHASES NO BUSINESSMAN COULD REACH THE TARGET OF SALES OF RS.10,95,180 BY SELLING GOODS OF RS.2,17,034 ONLY. THUS, THE PRINCIPLES OF PRESUMPTION FAVOURED THE CASE OF THE ASSESSEE AND PROVED THE EXISTENCE OF PURCHASES WHICH COULD NOT BE DENIED ON THE FACTS AND CIRCUMSTANCES OF THE AS THE SALES WERE EFFECTED TO A GOVERNMENT DEPARTMENT. THE ASSESSING OFFICER THAT THERE COULD BE NO DOCUMENTARY EVIDENCE WHEN PURCHASES WERE BOGUS WAS ALSO NOT TENA BLE THE ASSESSEE HAD FURNISHED DETAILS AND PARTICULARS OF PURCHASES AND SALES OF FINISHED GOODS DATE - WISE, BILL - WISE, NAME - WISE, ITEM - WISE, QUANTITY - WISE, STOCK FOLIO - WISE AND AMOUNT - WISE AND ALSO GOVERNMENT ORDER NUMBER - WISE AND THE ASSESSING OFFICER HAD NOT ANY DEFECTS, IRREGULARITY AND DISCREPANCY IN THE STATEMENTS AND BOOKS OF ACCOUNT, BILLS AND VOUCHERS, PRODUCED BEFORE HIM. THESE STATEMENT, GIVING ALL RELEVANT PARTICULARS AND DETAILS, WERE GOOD PIECES OF EVIDENCE DULY SUPPORTED BY BOOKS OF ACCOUNT AND UNLESS AND UNTIL THEY WERE CONTROVERTED/ : OR THEIR CONTENTS WERE DISBELIEVED OR DISTURBED BY POINTING OUT DEFECTS OR BY PROVING THE DEFECTS WITH POSITIVE EVIDENCE, PURCHASES COULD NOT BE DECLARED TO BE BOGUS. THUS THE ASSESSING OFFICER WAS NOT JUSTIFI ED IN DECLARING THE PURCHASES TO BE BOGUS FOR THE REASONS GIVEN BY HIM. ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 9 THE ASSESSMENT ORDER WOULD SHOW THAT THE ASSESSING OFFICER WAS NOT SURE OF MAKING A WELL - DETERMINED ADDITION ON ACCOUNT OF BOGUS PURCHASES. FIRSTLY, HE PRESUMED THE BOGUS PURCHASES BU T WHEN HE WAS CONFRONTED WITH SALES TO A GOVERNMENT DEPARTMENT ALONG WITH PURCHASES, HE SWITCHED OVER TO THE PRESUMPTION OF CONCEALED STOCK. BUT AGAIN, WHEN HE FOUND THAT ON THE BASIS OF THE ACTUAL FACTS AND FIGURES, HE MIGHT NOT SUCCEED IN APPLYING THE TH EORY OF CONCEALED STOCK, HE JUMPED TO THE THIRD PRESUMPTION OF INFLATED EXPENSES. THE COMMISSIONER (APPEAL) HAD TAKEN THE FOURTH STAND THAT THE ASSESSEE MIGHT HAVE SHOWN BOGUS PURCHASES IN EARLIER YEARS WHICH WERE DETECTED IN THE INSTANT YEAR. HOWEVER, BOG US PURCHASES OF EARLIER YEARS COULD NOT BE ADDED TO THE TOTAL INCOME OF THE INSTANT YEAR. BEFORE THE TRIBUNAL THE DEPARTMENT HAD TAKEN A FIFTH STAND BY SUBMITTING THAT THESE BOGUS PURCHASES WERE NOTHING BUT CASH CREDITS. THUS THE DEPARTMENT WAS NOT FIRM AN D DECISIVE IN DETERMINING THE NATURE AND CHARACTER OF THE ADDITION ON ACCOUNT OF THE SO - CALLED BOGUS PURCHASES. IT WAVERED AMONG FIVE STANDS I.E., BOGUS PURCHASES, CONCEALED STOCK AND INFLATED EXPENSES ON ONE HAND AND PURCHASES OF EARLIER YEARS AND CASH CR EDITS ON THE OTHER. ALL THE STANDS WERE CONTRARY TO EACH OTHER. THE DEPARTMENT HAD FAILED TO RECONCILE THEM AT ANY STAGE. SUCH DEVIATING STANDS WERE NOT ONLY CONTRARY TO THE FACTS OF THE CASE BUT WERE ALSO CONTRARY TO THE PROVISIONS OF LAW AND THEREFORE, C OULD NOT BE ACCEPTED AND RECOGNISED IN THE EYES OF LAW AND COULD NOT STAND THE TEST OF JUDICIAL SCRUTINY AND FACTUAL ANALYSIS AND EXAMINATION. THE BURDEN OF ESTABLISHING MALA FIDES IS VERY HEAVY ON THE PERSON WHO ALLEGES IT. NORMALLY THE VERY SERIOUS NATU RE OF THE ALLEGATION DEMANDS A CREDIBLE PROOF OF A HIGH ORDER IN SUPPORT OF SUCH ALLEGATIONS, MORE SO WHEN THE PURCHASES WERE LINKED WITH SALES TO A GOVERNMENT DEPARTMENT. THE REVENUE HAD COMPLETELY FAILED TO DISCHARGE THIS HEAVY BURDEN OF PROVING AND ESTA BLISHING MALA FIDES ON THE PART OF THE ASSESSEE BY PRODUCING COGENT, POSITIVE AND CREDIBLE EVIDENCE OF A HIGH ORDER IN SUPPORT OF BOGUS PURCHASES. ONLY THE INSPECTOR REPORT AND FOUR ENVELOPES CONTAINING SUMMONS RETURNED BY THE POST OFFICE WITH REMARK 'NOT KNOW', ON THE BASIS OF WHICH THE ALLEGATION WAS MADE COULD, NOT BE SAID TO BE CREDIBLE EVIDENCE AND - PROOF OF A HIGH ORDER. FOR THE REASONS GIVEN ABOVE, IT WAS TO BE HELD THAT THE COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION ON ACCOU NT OF BOGUS PURCHASES MADE BY THE ASSESSING OFFICER. ACCORDINGLY, ORDERS OF THE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS) WERE QUASHED AND THE ADDITION WAS DELETED.' ALTHOUGH IN THE PRESENT CASE, THE AO HAD RECEIVED INFORMATION FROM THE SALES - TAX A UTHORITIES REGARDING THE SUPPLIERS OF PURCHASED MATERIALS TO BE SUSPICIOUS DEALERS FOR DEFAULTING VAT TO THE SALES - TAX DEPARTMENT, YET IT WAS FOR THE AO TO FURTHER CORRESPOND WITH THE SALES - TAX ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 10 AUTHORITIES ASKING THEM AS TO WHETHER THEY HAD INITIALLY BEEN GIZ>EN SALES - TAX REGISTRATION NUMBER WITHOUT ENQUIRING THE ADDRESSES OF THE PARTIES, THE KYC DETAILS FROM THEIR BANK ACCOUNTS AND THEIR EARLIER CONDUCT REGARDING PAYMENT OF VAT BEFORE TLIEY DEFAULTED IN PAYING VAT TAXES. NO ADVERSE FINDING FROM THE SALES - T AX AUTHORITIES ON THIS SCORE HAVE BEEN RECEIVED BY THE AO NOR SUCH ENQUIRIES WERE CONDUCTED BY THE AO IN RESPECT OF FACTS NARRATED ABOVE. (V) IN THE CASE OF THE APPELLANT, THE AO HAS USED GENERAL INFORMATION COLLECTED BY THE ECONOMIC INTELLIGENCE UNIT OF THE SALES - TAX DEPARTMENT. NO COPY OF WHATEVER INFORMATION RECEIVED HAS BEEN GIVEN TO THE APPELLANT. NO OPPORTUNITY HAS BEEN GIVEN TO THE APPELLANT TO REBUT THE SAME. THE SAID INFORMATION IS USED AGAINST THE APPELLANT AND THE PURCHASES HAVE BEEN STRAIGHTWAY TREATED AS BOGUS. THE AO HAS NOT ALLOWED THE APPELLANT TO CROSS EXAMINE THE SAID PARTIES. UNDER THE CIRCUMSTANCES THE CIRCUMSTANCES THE ADDITION / DISALLOWANCE MADE BY THE AO, TO THE INCOME OF THE APPELLANT, TREATING PURCHASES FROM THE PARTIES IN QUESTION AS BOGUS, CANNOT WITHSTAND THE TEST OF JUDICIAL SCRUTINY. IN THIS REGARD, REFERENCE IS MADE TO AND RELIANCE IS PLACED ON THE JUDGEMENT OF THE PUNJAB HIGH COURT IN THE CASE OF CHIRANJILAL STEEL ROLLING MILLS VS. CIT (841TR 222),WHERE IT HAS BEEN HELD AS U NDER ; ' THE ONLY MATERIAL BEFORE THE INCOME - TAX OFFICER ON THE BASIS OF WHICH THE ADDITION WAS MADE TO THE INCOME OF THE ASSESSEE - FIRM WAS A CERTIFIED COPY OF THE UCHANTIBAHI OF G RECEIVED FROM THE SALES TAX DEPARTMENT AND SO COULD NOT BE PRODUCED OR SHO WN TO THE ASSESSEE - FIRM. IT WAS ALSO NOT SHOWN WHO MADE THE COPY OF UNDER WHOSE ADVICE AND AFTER MAKING THE COPY WHERE DID THE UCHANTIBAHI DISAPPEAR. SM, A PARTNER OF G, WAS EXAMINED UNDER SECTION 37 OF THE ACT AND HE DENIED THAT THE UCHANTIBAHI RELATED T O HIS FIRM. IT WAS EVIDENT FROM HIS STATEMENT THAT SM. DID NOT SUPPORT THE ENTRIES IN THE UCHANTIBAHI AND NO OTHER MATERIAL WAS, BROUGHT ON THE RECORD ON THE CONNECT THE ENTRIES IN THE UCHANTIBAHI WITH ANY TRANSACTION BETWEEN THE ASSESSEE - FIRM AND G, THE MERE COPY OF THE UCHANTIBAHI SUPPLIED BY THE SALES TAX DEPARTMENT, IN THE CIRCUMSTANCES OF THIS CASE, WAS NOT A LEGAL OR ADMISSIBLE EVIDENCE ON THE BASIS OF WHICH THE ADDITION COULD BE MADE TO THE INCOME OF THE, ASSESSEE - FIRM FORM UNDISCLOSED SOURCES. LEGA L AND ADMISSIBLE EVIDENCE MEANS EVIDENCE ON WHICH A JUDICIAL MIND CAN ACT BY FORMING A 'BELIEF THAT IT IS TRUE ALTHOUGH THE ASSESSEE DENIES IT. THE PROVISIONS OF THE INDIAN EVIDENCE ACT COULD NOT BE RESORTED TO JUDGE AND ADMISSIBILITY OR LEGALITY OF A PART ICULAR PIECE OF EVIDENCE ON WHICH THE INCOME - TAX OFFICER HAS THE POWER TO COLLECT EVIDENCE FROM ANY SOURCE BUT IT IS HIS DUTY TO PUT IT TO THE ASSESSEE BEFORE MAKING IT THE BASIS OF HIS ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 11 ASSESSMENT. IF THE ASSESSEE DENIES THE INFORMATION COLLECTED BY THE IN COME - TAX OFFICER, IT IS THE DUTY OF THE INCOME - TAX OFFICER TO SATISFY HIMSELF BY MAKING INDEPENDENT ENQUIRY FROM SOURCES CONSIDERED RELIABLE BY HIM SO AS TO DECIDE WHETHER THE INFORMATION PASSED ON TO HIM IS TRUE OR NOT. IF, AS A RESULT OF HIS OWN INDEPEND ENT ENQUIRY HE COMES TO THE CONCLUSION THAT THE INFORMATION RECEIVED BY HIM IS TRITE, HE IS AT LIBERTY TO ACT THEREUPON AFTER DISCLOSING IT TO THE ASSESSEE AND AFFORDING HIM A REASONABLE OPPORTUNITY OF REBUTTING IT. BUT HE HAS NO TIGHT TO BURDEN THE ASSESS EE WITH AN EXTRA AMOUNT OF TAX ON A VAGUE INFORMATION GIVEN TO HIM WITHOUT HIMSELF VERIFYING ITS TRUTHFULNESS OR RELIABILITY. IN THE INSTANT CASE, THE INCOME - TAX OFFICER MADE NO INDEPENDENT ENQUIRIES AND MERELY RELIEF ON THE COPY SUPPLIED BY THE SALES TAX DEPARTMENT. IN THE EARLIER PART OF THIS JUDGMENT, THE ENTRIES FORM THE UCHANTIBAHI COMMUNICATED TO THE INCOME - TAX OFFICER HAD BEEN SET OUT AND THESE ENTRIES SHOW THAT NO PARTICULAR HAD BEEN GIVEN AS TO THE TRANSACTIONS TO WHICH THOSE ENTRIES RELATED. THE N ATURE OF THE TRANSACTIONS BETWEEN THE PARTIES WAS ALSO TO BE INVESTIGATED, IN ORDER TO FIND OUT WHETHER THE ASSESSEE ]IAD ANY OCCASION TO PASS ON CASH TO G WHEN THE CASE OF THE ASSESSEE WAS THAT THEY USED TO SELL IRON AND STEEL GOODS MANUFACTURED BY TATAS. THERE WAS NO MATERIAL ON THE RECORD FOR THE INCOME - TAX OFFICER TO REACH THE CONCLUSION THAT THE AMOUNT IN QUESTION HAD BEEN PASSED ON BY THE ASSESSEE - FIRM IN CASH TO G. THE INCOME - TAX OFFICER ALSO DID NOT HAVE THE ADVANTAGE OF SEEING THE UCHANTIBHAI, ENTR IES FROM WHICH HAD BEEN SUPPLIED TO HIM, IN ORDER TO FIND OUT WHETHER THAT BAHI WAS A RELIABLE DOCUMENT. HE HAD ADMITTEDLY NOT RECOVERED IT FROM G NOR WAS IT SHOWN ON THIS RECORD AS TO WHO RECOVERED IT FROM THAT FIRM. NO OFFICIAL OF THE SALES TAX DEPARTMEN T WAS EXAMINED TO KNOW ABOUT THIS FACT. IT WAS ALSO SIGNIFICANT THAT IN APPEAL THE APPELLATE AUTHORITY UNDER THE SALES TAX ACT AGREED TO ACCEPT FROM SM THE SUM OF RS.3,100 INSTEAD OF RS.18,000 WHICH HAD BEEN IMPOSED BY WAY OF SALES FAX ON THE BASIS OF THAT UCHANTIBAHI,, WHICH CLEARLY SHOWED THAT EVEN THE APPELLANT AUTHORITY WAS NOT CONVINCED THAT MR.UCHANTIBAHI WAS A GENUINE BOOK WHICH COULD BE EXPLICITLY RELIED UPON. UNDER THE CIRCUMSTANCES, GREATER RESPONSIBILITY LAY ON THE INCOME - TAX OFFICER TO SATISFY H IMSELF ABOUT ENTRIES ENUMERATED IN THE COPY SUPPLIED TO HIM, MORE PARTICULARLY BECAUSE SM, WHO WAS PRODUCED AS A WITNESS BEFORE HIM, CATEGORICALLY DENIED THAT THAT UCHANTIBAHI WAS RECOVERED FROM HIS FIRM OR BELONGED TO HIS FIRM. HE ALSO DENIED THE ENT RIES MENTIONED IN THE COPY. THE APPELLATE ASSISTANT COMMISSIONER OF INCOME - TAX RIGHTLY REJECTED THAT DOCUMENT. THE SALES TAX. DEPARTMENT ALSO DID NOT NOTIFY TO THE INCOME - TAX OFFICER THAT ON THE BASIS OF THAT BAHI THEY HAD MADE ENTRIES FROM OTHER PARTIES W ITH WHOM G HAD DEALINGS AND WHICH WERE MENTIONED IN THAT BAHI. IF ONLY THE TRANSACTIONS RELATING TO THE ASSESSEE WERE MENTIONED IN THAT BAHI, THEN ON THE FACE OF IT WAS UNRELIABLE. INCOME - TAX OFFICER GRAVELY ERRED IN RELYING ON THE ENTRIES FROM UCHANTIBAHI WITHOUT ASCERTAINING THEIR CORRECTNESS FROM ANY OTHER SOURCE AND ACTED ON A MERE SUSPICION WHICH ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 12 WAS NOT JUSTIFIED. FOR THESE REASONS IT WAS HELD THAT THE COPY ENTRIES FROM THE UCHANTIBAHI SUPPLIED TO THE INCOME - TAX OFFICER BY THE SALES TAX DEPARTMENT WAS NOT LEGAL AND ADMISSIBLE EVIDENCE ON WHICH THE INCOME - TAX OFFICER COULD ACT FOR IMPOSING EXTRA BURDEN OF INCOME - TAX ON THE ASSESSEE. THE APPELLATE ASSISTANT COMMISSIONER TOOK THE CORRECT VIEW OF THE MATTER AND RIGHTLY DELETED THE ADDITION WHICH HAD BEEN M ADE BY THE INCOME - TAX OFFICER TO THE INCOME OF THE ASSESSEE. THE TRIBUNAL ERRED IN LAW IN RESTORING THAT DELETION MERELY ON THE BASIS OF THE COPY OF THE UCHANTIBAHI OF G SUPPLIED BY THE SALES TAX DEPARTMENT TO THE INCOME - TAX OFFICER, WHICH COULD NOT BE REL IED UPON FOR THE REASONS ALREADY STATED'. THE DISALLOWANCE MADE BY THE AO IN ABOVE CIRCUMSTANCES, CANNOT BE TREATED AS GOOD IN VIEW OF THE ABOVE JUDGMENT BECAUSE INFORMATION IN THE FORM OF STATEMENTS OF THIRD PARTIES BEFORE THE SALES TAX DEPARTMENT ARE NO T HAVING BINDING FORCE ON WHICH THE AO COULD ACT FOR IMPOSING EXTRA BURDEN ON THE ASSESSEE BECAUSE THE SAME NOT ALLOWED FOR CROSS - EXAMINATION. (VI) PRINCIPLE OF NATURAL JUSTICE HAS NOT BEEN FOLLOWED IN THE PRESENT CASE. THE LAW REQUIRES THAT QUASI JUDICIA L AUTHORITIES SHOULD OBSERVE RULES OF NATURAL JUSTICE IN THE CONDUCT OF THE ENQUIRY AND IF THEY DO SO, THEIR DECISION IS NOT LIABLE TO BE IMPEACHED ON THE GROUND THAT THE PROCEDURE FOLLOWED WAS NOT IN ACCORDANCE WITH THAT WHICH OBTAIN IN A COURT OF LAW, ST ATING IT BROADLY AND WITHOUT INTENDING IT TO BE EXHAUSTIVE, IT MAY BE OBSERVED THAT RULES OF NATURAL JUSTICE REQUIRE THAT A PARTY SHOULD HAVE THE OPPORTUNITY OF ADDUCING ALL RELEVANT EVIDENCE ON WHICH HE RELIES, THAT THE EVIDENCE OF THE OPPONENT SHOULD BE TAKEN IN HIS PRESENCE FIND THAT HE SHOULD BE GIVEN THE OPPORTUNITY OF CROSS - EXAMINING THE WITHNESS EXAMINED BY THAT PARTY AND THAT NO MATERIAL SHOULD BE RELIED AGAINST HIM WITHOUT INS BEING AN OPPORTUNITY OF EXPLAINING THEM, (UNION OF INDIA VS. T R VERMA AIR 1957 SC 882). (VII) IN THE CASE OF STATE OF KERALA VS. K T SHADULIYUSUFF (1977) 39 STC 478, 481 (SC), THE HON'BLE SUPREME COURT HAS POINTED OUT THAT THE LAW IS WELL SETTLED THAT TAX AUTHORITIES ENTRUSTED WITH THE POWER TO MAKE ASSESSMENT OF TAX DISCHAR GE QUASI JUDICIAL FUNCTIONS AND THEY ARE BOUND TO OBSERVE PRINCIPLES OF NATURAL JUSTICE IN REACHING THEIR CONCLUSION. (VIII) HON'BLE SUPREME COURT, IN THE CASE OF STATE OF MYSORE VS. SHIVA BASAPPA SHIVAPPA MARKAPUR AIR 1963 SC 375 AND HON'BLE DELHI HIGH CO URT IN THE CASE OF INDIAN PAN WORKS VS. CHIEF COMMISSIONER (1969) 24 STC 44 (DEL), HON'BLE KERALA HIGH COURT IN THE CASE OF A S SURESH CHENOY VS. WTO 149 ITR 65 (KER), AND HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF MOHAMMEDI BEGUM VS. CIT 158 ITR 662 (AP) HAVE EXPRESSED THEIR OPINION THAT TRIBUNAL EXERCISING QUASI JUDICIAL JUNCTIONS ARE NOT COURTS AND THAT TLIEREFORE THEY ARE NOT BOUND ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 13 TO FOLLOW PROCEDURE PRESCRIBED FOR TRIAL OF ACTIONS IN COURT, NOR ARE THEY BOUND BY STRICT RULES OF EVIDENCE. THEY CA N, UNLIKE COURT, OBTAIN ALL INFORMATION MATERIAL FOR THE POINTS UNDER ENQUIRY FROM ALL SOURCES AND THROUGH ALL CHANNELS, WITHOUT BEING FETTERED BY RULES OF PROCEDURE, WHICH GOVERN PROCEEDINGS IN COURT, HOWEVER, THE OBLIGATION CASTS ON THEM BY THE LAW IS TH AT THEY SHOULD NOT ACT ON ANY INFORMATION WHICH THEY RECEIVED, UNLESS THEY PUT IT TO THE PARTY AGAINST WHOM IT IS TO BE USED AND GIVEN HIM FAIR OPPORTUNITY TO EXPLAIN IT. (IX) IN FACTS IT HAS BEEN HELD THAT IF AN ASSESSING AUTHORITY IS RELYING ON THE TEST IMONY OF A WITNESS, THE ASSESSEE IS TO BE AFFORDED AN OPPORTUNITY TO CROSS EXAMINE HIM. (PAHAR CHAND & SONS VS. STATE OF PUNJAB (1972) 30 STC 211 (PUNJAB), GARGI BIN JWALA PRASAD VS. CIT96 ITR 97 (ALL) REFERRED AND RELIED UPON. (X) THE HON'BLE SUPREME COU RT IN THE CASE OF STATE OF PUNJAB VS. BHAGATRAM AIR 1974BC2335AND HON'BLE 'BOMBAY HIGH COURT IN THE CASE OF VASANJI GHELA & CO. VS CIT(1977) 40 STC 544, 553 (BOM) EXPRESSED THEIR OPINION THAT WHERE FACTS OF A CASE CALL FOR AN OPPORTUNITY TO BE GIVEN, IT I S NECESSARY THAT A COPY OF THE INCRIMINATING STATEMENT OF THE WITNESS MUST BE GIVEN TO THE ASSESSES IN ORDER TO ENABLE HIM TO HAVE AN EFFECTIVE AND USEFUL CROSS EXAMINATION. THIS HAS NOT DONE IN THE PRESENT CSE. (XI) AN ASSESSMENT CANNOT BE BASED ON ENTRIE S FOUND IN THE BOOKS OF ACCOUNTS OF A THIRD PARTY, WITHOUT GIVING TO THE ASSESSEE AN OPPORTUNITY OF CROSS EXAMINING THAT PARTI/ WITH REFERENCE TO THOSE BOOKS OF ACCOUNTS AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF STATE OF KERALA VS K T SHADULIYUSU FF (1977) 39STC 478 (SC) AND KALRA GLUE FACTORY VS. SALES TAX TRIBUNAL (1987) 167 (1TR) 498 (SC) 498 (SC). IN THE PRESENT CASE, ADDITION ARE MERELY BASE ON THE AFFIDAVIT OF THIRD PARTIES. IT WELL KNOWN THAT AFFIDAVITS ARE NOTHING MORE THAN A SELF - SERVING D OCUMENT. (XII) THE HON'BLE SUPREME COURT IN THE CASE OF SWADESHI COTTON MILLS CO. LTD VS UNION OF INDIA (1981) 51 COMP CAS 210,255 (SCI AND HON'BLE GUJRAT HIGH COURT IN THE CASE OF CIT VS. VIMLABEN BHAGWANDAS PATEL 118 ITR 134, 184 (GUJ) HAVE OBSERVED THA T AQUASI JUDICIAL DECISION RENDERED OR AN ORDER MADE IN VIOLATION OF THE AUDIALTERAMPARTEM RULE IN NULL AND VOID AND THE ORDER IMPUGNED IN SUCH A CASE CAN BE STRUCK DOWN AS INVALID ON THAT SCORE ALONE.' 6.3.10. IT HAS NOT BEEN DISPROVED BY THE AO THAT THE SUSPICIOUS PARTIES IN QUESTION WERE, AT THE TIME WHEN THE PURCHASE WERE MADE, WERE HOLDING A VALID AND LAWFUL REGISTRATION MVAT ACT 2002 AND THE CST ACT. THE SALES TAX DEPARTMENT ISSUES A REGISTRATION CERTIFICATE AFTER STRICT VERIFICATION OF IDENTITY OF T HE PARTY, ITS PLACE OF BUSINESS AND PLACE OF RESIDENCE, BANK ACCOUNT PROOF, RATION CARD, RENT RECEIPTS, ELECTRIC ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 14 BILLS AND SUCH VARIOUS OTHER DOCUMENTS. AND AFTER THE REGISTRATION CERTIFICATE IS ISSUED. THE OFFICERS OF THE DEPARTMENT PERSONALLY VISIT THE P LACE OF BUSINESS OF THE PARTY, CALLED ADVISORY VISIT, AND VERIFY NOT ONLY THE PLACE OF BUSINESS BUT ALSO THE ORIGINAL DOCUMENTS AND BANK STATEMENTS, BOOKS OF ACCOUNTS, STOCK POSITION, WHETHER THE PARTY HAS FILED THE VAT RETURNS OR NOT AND ALSO VERIFY THE C ORRECTNESS OF THE VAT RETURNS FILED ETC.. IF THE ADVISORY VISIT TEAM REPORTS ANY FALSEHOOD OR OTHERWISE ANYTHING SUSPICIOUS, THEY ARE BOUND TO REPORT THE SAME TO THE HIGHER AUTHORITIES INCLUDING DEPUTY 'COMMISSIONER OF SALES - TAX, REGISTRATION BRANCH AND IN SUCH CASE, THE REGISTRATION CERTIFICATE OF THE CONCERNED PARTY IS CANCELLED AFTER GIVING A NOTICE. GENERALLY SUCH ADVISORY TAKES PLACE WITHIN A FEW MONTHS OF THE GRANTS OF REGISTRATION CERTIFICATES. THE AO HAS NOT BROUGHT ON RECORD AS TO WHETHER THE REG ISTRATION CERTIFICATE OF EACH AND ANY OF THE ABOVE PARTIES WERE CANCELLED ON THE BASIS OF ADVISORY VISIT REPORT PRIOR TO THE DATE OF PURCHASE BY THE ASSESSEE. IN OTHER WORDS, IT CAN BE CONCLUDED THAT NOTHING WRONG WAS FOUND IN ADVISORY VISIT, OR SAY EVEN T HE ADVISORY VISIT TEAM FOUND EVERYTHING, INCLUDED ITS SALES AND PURCHASE ACTIVITIES IN ORDER TILL THEY STARTED NOT PAYING VAT AT SUBSEQUENT STAGE. THUS, IT CANNOT BE CONCLUDE THAT ANY OF THE PARTIES IN QUESTION IS NOT GENUINE. THEY MIGHT HAVE LATER ON BECA ME DEFAULTER OF VAT BUT THAT ITSELF WILL NOT RENDER THE PURCHASES MADE FROM THEM, PRIOR TO THEIR DECLARATION AS SUSPICIOUS DEALER, AS BOGUS. SECONDLY, THE SAID PARTIES HAD TO HAVE BANKING ACCOUNT. OPENING OF A BANKING ACCOUNT IS NOT POSSIBLE WITHOUT STRIC TLY COMPLYING WITH THE KYC NORMS. HENCE THE BANK MUST HAVE OPENED THE BANK ACCOUNT OF THIS PARTY ONLY AFTER FULLY COMPLYING WITH THE KYC NORMS. THIS AGAIN SUGGEST THAT THE PARTIES WERE GENUINE AND THEIR ADDRESSES WERE ALSO GENUINE TILL THEY BECAME DEFAULTE RS IN VAT. ALTERNATIVELY, THE AO TOO HAS NOT DONE ANYTHING TO BRING ANY ADVERSE MATERIALS AGAINST THE SUSPICIOUS DEALER FROM THE BANK WITH REGARD TO THEIR KYC VERIFICATION. IN VIEW OF THIS, NO DIRECT INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE MERELY BECA USE THE ALLEGED SUPPLIER HAVE BEEN TERMED AS SUSPICIOUS / HAWALA DEALERS BY THE SALES - TAX DEPT. OF GOVT. OF MAHARASHTRA FOR THE TIME BEING. 6.3.11, IT IS FOUND THAT THE APPELLANTS EVIDENCE IN THE FORM OF PURCHASE BILL, LEDGER ACCOUNTS, BANK STATEMENTS ETC . HAVE NOT BEEN PROPERTY CONSIDERED IN RIGHT PERSPECTIVE: THE APPELLANT EXPLAINED THAT IT HAD SUBMITTED COPIES OF ALL PURCHASE BILLS, LEDGER ACCOUNTS, BANK STATEMENTS FOR THE PURCHASE MADE FROM THESE PARTIES BEFORE THE AO, SAME WERE ALSO PRODUCED DURING TH E PROCEEDINGS ALSO AND FROM THESE DOCUMENTS IT WILL BE DIFFICULT TO HOLD THAT THE PURCHASE FROM THE PARTIES IN QUESTION WERE IN GENUINE OR BOGUS . ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 15 6.3.12, NO DISCREPANCY HAS BEEN POINTED OUT IN THE BOOKS OF ACCOUNTS NOR THE SAME WERE REJECTED BY THE AO FO R ANY GOOD REASONS. IT HAS BEEN EXPLAINED BY THE APPELLANT THAT ALTHOUGH ALL THE FACTS AND EVIDENCES, BILLS, VOUCHERS, BOOKS OF ACCOUNTS, BANK STATEMENTS ETC. WERE ADDUCED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AND VERIFIED BY THE AO, BUT THE L ATER THOSE TO MAKE THE DISALLOWANCE OF PURCHASES FROM THESE PARTIES, THAT TOO WITHOUT REJECTING THE BOOKS OF ACCOUNTS AND WITHOUT DISBELIEVING ANY SALES OF THE APPELLANT. THE AO MADE ADDITIONS ON THE BASIS OF INFORMATION OF ALLEGED HAWALA DEALERS PROVIDED BY THE SALES TAX DEPARTMENT ON THE BASIS OF DECLARATION/AFFIDAVITS WHICH WERE COLLECTED BEHIND THE BACK OF THE APPELLANT AND NO COPY THEREOF/ WAS GIVEN TO THE APPELLANT EITHER BEFORE OR AFTER USING THE SAID MATERIALS AGAINST THE ASSESSEE AND THE ASSESSEE W AS ALSO NOT PROVIDED ANY OPPORTUNITY TO CROSS - VERIFY THE VARIOUS FACTS RECORDED IN THE BOOKS OF ACCOUNTS, BANK STATEMENTS ETC. OF THE ALLEGED HAWALA DEALERS. THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT HAVE NOT BEEN REJECTED. THE SALES OF THE APPELLANT HAV E NOT BEEN DOUBTED. NO INFIRMITY IS POINTED OUT IN THE EVIDENCES ADDUCED BY THE APPELLANT. HENCE MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE AO, ONE CANNOT CONCLUDE THAT THE PURCHASES ARE NOT MADE BY THE APPELLANT FROM SUCH SUPPLIERS. IN FACT INCOME - TAX ACT, 1961 GIVES ENOUGH POWER TO THE AO TO ENFORCE ALLOWANCE OF SUCH SUSPICIOUS PARTIES AND THE AO COULD HAVE DONE THE SAME. IT WOULD HAVE BEEN BETTER IF THE AO WOULD HAVE CO - ORDINATED WITH SALES - TAX DEPT. AND TAKEN SOME POSITIVE STEPS TOWARDS A FFORDING CROSS - EXAMINATION AND CROSS - VERIFICATION OF FACTS BUT THIS HAS NOT BEEN DONE IN THEIR CASE. DISALLOWANCE IS MADE/ MERELY ON THE BASIS OF SUSPICION. SUCH DISALLOWANCE CANNOT BE SUSTAINED. 6.3.13. IN FACT IT HAS BEEN SUBMITTED THAT THE PRIMARY ONUS OF PROVING THE GENUINENESS IS ON THE ASSESSEE. THE ASSESSEE, ON ITS PART, ALREADY SUBMITTED PURCHASE INVOICES, STOCK MOVEMENT RECORDS, VAT REGISTRATION NUMBERS/ LEDGER ACCOUNTS/ BANK STATEMENTS REFLECTING ENTRIES OF PAYMENTS MADE TO THE SAID PARTY AGAINST PURCHASES FROM IT ETC. THE PAYMENT FOR PURCHASES TO THE ALLEGED SUSPICIOUS DEALERS HAVE BEEN EXPLAINED TO HAVE BEEN MADE BY THE ASSESSEEVIA BANKING CHANNEL. THE AO HAS NOT MADE ANY CASE AS TO WHETHER THE ASSESSE AS WELL AS THE SUSPICIOUS DEALERS WERE IN A NY WAY RELATED PARTIES OR SECTION 40(A)(2)(B) OF THE I.T. ACT, 1961 WERE APPLICABLE. THE AO HAS MADE OUT ANY CASE OF DIVERGENCE OF FUND TO OUTSIDE PARTIES. NO CONCRETE PROOF HAS BEEN MADE OUT THAT THE PAYMENTS WERE RECEIVED BACK IN CASH BY THE ASSESSEE EXC EPT FOR THE FACT THAT THE AO HAS RELIED UPON THIRD PARTY INFORMATION IN RESPECT OF SUSPICIOUS DEALERS, WHICH IN THE ABSENCE OF CROSS - EXAMINATION CANNOT WITHSTAND THE TEST OF JUDICIAL SCRUTINY. THUS, IT WAS ARGUED THAT THE APPELLANT HAS CHARGED THE INITIAL BURDEN AND THEREFORE, THE ONUS SHIFTED TO THE ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 16 AO TO DISPROVE THE EVIDENCES ADDUCED BY THE APPELLANT. NONE OF THE DOCUMENTS ADDUCED BY THE APPELLANT HAS BEEN DISPROVED OR DISBELIEVED BY THE AO WITH ANY CONCRETE EVIDENCE. IT HAS BEEN HELD BY THE BOMBAY HI GH COURT IN THE CASE OF ORIENT TRADING CO LTD V CIT (49 ITR 723), PATNA HIGH COURT IN THE CASE OF SAROGI CREDIT CORPORATION V CIT (103 ITR 344), MADRAS HIGH COURT IN THE CASE OF CIT V GANI SILK PALACE (171 ITR 373), ALLAHABAD HIGH COURT IN THE CASE OF DAY A C HAND JAIN VAIDYA (98 ITR 280), IT WILL NOT THEREAFTER BE FOR THE ASSESSEE TO EXPLAIN FURTHER. THE BURDEN WILL SHIFT ON TO THE AO TO SHOW WHY THE ASSESSEE'S CASE CANNOT BE ACCEPTED, BUT THE SAME HAS NOT BEEN DISCHARGED. IT IS WELL SETTLED THAT A DISALLO WANCE, WITHOUT ANY VALID REASONS AND WITHOUT POINTING OUT EXCESSIVENESS OR INFIRMITY IS NOT JUSTIFIED. RELIANCE IS MADE AND REFERENCE IS PLACED ON NEHA PROTEINS LTD. V. ASST. CIT 83 TTJ (JD.)236, SPEED CARRIES V. ITO (1987) 27 TTJ (AHD) 387, BETA NAPHTHOLO VT LTD. V. ASST. CIT 50 TTF (IND.) 375, JUPITER TEXTILES V. ITO (2002) 77 TTJ (JD) 735.) HENCE THE DISALLOWANCE MADE IN THE CASE OF THE APPELLANT BY THE AO WITHOUT POINTING OUT ANY EXCESSIVENESS OR INFIRMITY CANNOT BE HELD AS JUSTIFIABLE. 6.3.14. THE AO H AS THE AMPLE AUTHORITY VESTED BY LAW IN HIM/HER, TO ISSUE SUMMONS TO THE PARTIES AND ENFORCE ATTENDANCE AND REQUISITE COMPLIANCE. BUT THE NOTICES U/S 133(6) OR 131 WERE NOT ENFORCED UPPN THE SAID PARHTWHIRH THE AO COULD HAVE DONE BY CALLING FURTHER INFORM ATION FROM THE SALES - TAX AUTHORITIES REGARDING INITIAL DETAILS OF INITIAL TEAM VISITS OF SALES - TAX AUTHORITIES BEFORE GRANTING SALES - TAX REGISTRATION NUMBER OR THE KYC OF BANKS OBTAINED BY THE SALES - TAX AUTHORITIES BEFORE GRANTING SALES - TAX REGISTRATION NU MBER. THE AO COULD HAVE TAKEN ACTION TO SERVE THE SUMMONS AS PROVIDED UNDER ORDER 5, RULE 17 OF CODE OF CIVIL PROCEDURE. THUS, THE AO CANNOT FASTEN THE BLAME ON THE DOOR OF THE APPELLANT FOR NON - SERVICE OF SUMMONS OR NON PRODUCTION OF THE PARTIES IN QUESTI ON BEFORE HIM. IN FACT, WHEN THE TRANSACTIONS (PAYMENT FOR PURCHASE OF MATERIALS BY BANKING CHANNEL) GOT COMPLETED, THE ASSESSEE HAD NO AUTHORITY OVER THE SUPPLIERS OVER THE SUPPLIERS TO PRODUCE THEM BEFORE THE AO OR ANY OTHER AUTHORITY. 6.3.15. IN FACT, IN THE NEAR RECENT, MANY JUDGEMENTS HAVE COME FROM THE HON'BLE JURISDICTIONAL ITAT OF MUMBAI AS WELL AS HON'BLE BOMBAY HIGH COURT ON THE ISSUE OF ADDITION ON ACCOUNT OF SUCH THIRD PARTY INFORMATION/AFFIDAVITS WHERE THE RELEVANT ASSESSEES COULD NOT PRODUCE THE SUPPLIER BECAUSE BY THAT THE TRANSACTIONS OF PURCHASE/SALE OF MATERIAL HAD FINALIZED AND PAYMENTS WERE ALSO MADE. THE ASSESSEE HAD CONTROL OVER THE SUPPLIERS OF THE MATERIALS OR GOODS AND THEREFORE, THEY WERE NOT IN A POSITION TO PRODUCE THEM PERSONALL Y. IN FACT IN THE PRESENT ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 17 CASE, THE ASSESSEE HAD ASKED THE AO TO GET HIM CONFRONTED FROM THE RESPECTIVE SUPPLIERS AND GET CROSS - EXAMINED. EVEN THIS WAS THE DUTY OF THE AO TO ENFORCE ATTENDANCE OF SUCH SUPPLIERS AND GET CROSS - EXAMINED. HOWEVER, THE SAME HAS NOT BEEN DONE IN THE PRESENT CASE. THERE ARE NUMBER OF JUDGMENTS BY HON'BLE JURISDICTIONAL ITAT, MUMBAI AS WELL AS JURISDICTIONAL HON'BLE HIGH COURT OF MUMBAI ON THE ISSUE OF ADDITIONS RELATED TO PURCHASES FROM THOSE PARTIES WHO FAILED TO PAY VALUE ADD ED TAX TO THE GOVERNMENT OF MAHARASHTRA WITH REGARD TO THE SALE TRANSACTIONS AND WERE THE ADDITIONS WERE MADE BY AO BUT THE SAME WERE DELETED BY THE HON'BLE ITAT / HON'BLE HIGH COURT OF BOMBAY. I HAVE GONE THROUGH SUCH JUDGEMENTS. SOME OF THEM ARE WORTH ME NTIONING : - (I) REFERENCE IS MADE TO THE CASE OF CASE OF DCIT VS. RAJEEV G. KALATHIL (ITA NO;6727/MTWI/ 2012 OF ITAT MUMBAI 'V' BENCH [2014] 51 TAXMANN.COM 514(MUMBAI _ TRIB.) WHEREIN THE HO'BLE JURISDICTION ITAT, MUMBAI HELD ASUNDER: - 'WE HAVE HEARD THE RIV AL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO L OGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL F ROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO THE SITE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FO RMING PART OF CLOSING STOCK. AS FAR AS THE CASE OF WESTERN EXTRUSION (SUPRA) IS CONCERNED, WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THERE IS NOTHING, IN THE AO, ABOUT THE CASH TRIAL. SECONDLY/ PROOF OF MOVEMENT OF GOODS IS NOT IN DOUBT. THEREFORE, CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM A NY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO ENDORSE THE VIEW TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND NO. 1 AGAINST THE AO' (II) FURTHER REFERENCE IS MADE TO THE CASE OF NJKUNJ EXIMP ENTERPRISES PV T. LTD. ITA NO: 5604 OF 2030 DATED 17/12/2012 (216 TAXMAN 171), WHEREIN THE HONOURABLE MUMBAI HIGH COURT HAS HELD AS UNDER: - WE HAVE CONSIDERED THE SUBMISSION ON BEHALF OF THE REVENUE. HOWEVER, FROM THE ORDER OF THE TRIBUNAL DATED 30 - 04 - 2010, WE FIND THA T THE ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 18 TRIBUNAL HAS DELETED THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES NOT ONLY ON THE BASIS OF STOCK STATEMENT I.E. RECONCILIATION STATEMENT, BUT ALSO IN VIEW OF THE OTHER FACTS. THE TRIBUNAL RECORDS THAT THE BOOKS OF ACCOUNTS OF THE RESPONDENT - ASSESSEE H AVE NOT BEEN REJECTED. SIMILARLY, THE SALES HAVE NOT BEEN DOUBTED AND IT IS AN ADMITTED POSITION THAT SUBSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE GOVERNMENT DEPARTMENT I.E. DEFENCE RESEARCH AND DEVELOPMENT LABORATORY/ HYDERABAD. FURTHER, THERE WERE C ONFIRMATION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANK STATEMENT ALL OF WHICH WOULD INDICATE THAT THE PURCHASES WERE INFACT MADE. IN OUR VIEW, MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSES SING OFFICER OR THE CIT (A), ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT - ASSESSEE. THE ASSESSING OFFICER AS WELL AS CIT (A) HAVE DISALLOWED THE DEDUCTION OF RS. 1.33 CRORES ON ACCOUNT OF PURCHASES MERELY ON THE BASIS OF SUSPICION BECAUSE THE SELLERS AND THE CANVASSING AGENTS HAVE NOT BEEN PRODUCED BEFORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WELL A REASONED ORDER TAKING INTO ACCOUNT ALL THE FACTS BEFORE CONCLUDING THAT THE PURCHASES OF RS.1.33 CRORES WAS NOT BOGUS. N O FAULT CAN BE FOUND WITH THE ORDER DATED 30 - 04 - 2010 OF THE TRIBUNAL. IN VIEW OF THE ABOVE, WE FIND THAT QUESTION AS FORMULATED IS NOT A SUBSTANTIAL QUESTION OF LAW. THEREFORE, THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS.' (III) IN THE CASE OF CASE OF SHRI GANPATRAJ A. SANGHVI - ITA NO.2826/MUM/2013 A.Y.2009 - 10 WHEREIN THE JURISDICTIONAL ITAT, MUMBAI HAS HELD AS UNDER - '4, THE FIRST ISSUE RELATES TO THE DISALLOWANCE OF PURCHASES MADE. THE FACTS RELATING TO THE NAME ARE STATED AS UNDER BY THE I D, CIT(A) : '3. GROUND NO.L IS AGAINST THE ADDITION OF RS. 1,74,01,436/ - ON ACCOUNT OF BOGUS PURCHASES. BRIEF FACTS IN THIS REGARD ARE THAT DURING THE ASSESSMENT PROCEEDINGS, INQUIRIES WERE MADE U/S 133(6) FROM VARIOUS PARTIES FROM WHERE THE ASSESSEE HAS S LIOWN PURCHASE OF METALS. THE NOTICE ISSUED TO THE FIVE PARTIES IE. M/S MONTEX INDUSTRIES, M/S ROSHAN STEEL IMPEX, M/S MOKESH METAL AND TUBES, M/S VIRAJ STEEL AND ALLOYS AND M/S SHIVAM METALS INDUSTRIES RETURNED BACK BY THE POSTAL AUTHORITIES WITH A REMARK 'NOT KNOWN'. ACCORDINGLY, THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE PURCHASES FROM THESE PARTIES SHOULD NOT BE TREATED AS NON GENUINE AND THE SAME SHOULD NOT BE ADDED BACK. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FURNISHED LEDGER COPY OF PURCHASES, SIGNED BY THE RESPECTIVE PARTIES AND COPIES OF SAMPLE PURCHASE BILLS ALONG WITH A FEW DELIVERY CHALLANS AND CLAIMED THAT THE PURCHASES ARE GENUINE. HOWEVER, THE AO FURTHER INQUIRED THIS MATTER THROUGH ON THE SPOT FIELD INQUIRES BY THE IN SPECTOR, WHO SUBMITTED THAT NONE OF THE PARTIES EXISTS AT THE GIVEN ADDRESS AND THE INQUIRIES WITH THE NEARBY SHOPS REVEALED THAT NOBODY IS AWARE ABOUT THESE PARTIES. THE REPORT OF THE INSPECTOR ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 19 FORMS PART OF THE ASSESSMENT ORDER. ON THE BASIS OF DETAILED ENQUIRES, THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAS MANAGED TO OBTAIN THE SIGNATURES OF THESE PARTIES, BUT ACTUALLY THESE PARTIES DOES NOT EXISTS AT THE GIVEN ADDRESS. THE AO HAS FURTHER OBSERVED THAT (I) THE RECEIVER'S SIGNATURE ARE NOT AFFIXED ON THE DELIVERY CHALLANS OF THE PURCHASE FROM THESE PARTIES, (II) THE MODE OF TRANSPORT FOR DELIVERY OF THESE GOODS IS NOT MENTIONED ON THE PURCHASE BILLS OF THESE PARTIES WHEREAS THE PURCHASES INVOICE OF OTHER PARTIES CONTAINS THE LORRY NUMBER ETC. (HI) MAJOR PORTION OF PURCHASES ARE STILL SHOWN OUTSTANDING IN THE LIST OF SUNDRY CREDITORS .ON THE BASIS OF ALL THESE FACTS, THE AO HAS HELD THAT THE ASSESSEE HAS MERELY OBTAINED ACCOMMODATION ENTRIES FOR THESE PURCHASES. IF' AT ALL SUCH PURCHASE HAVE BEEN MA DE FROM SOME OTHER PARTY, TO MAKE CORRESPONDING SALES, THE SAME WOULD OBVIOUSLY BE IN CASH, WHICH WOULD ATTRACT THE PROVISIONS OF SECTION 40(A)(3) OF THE IT ACT ACCORDINGLY, THE AO HAS DISALLOWED RS.1,74,01,436/ - ON ACCOUNT OF SUCH BOGUS PURCHASES.' 5. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME TAX RULES, 1962 IN THE FORM OF TIN ALLOTMENT LETTER, SALES TAX ACKNOWLEDGEMENT OF E - RETURN, CHALLANS, CERTIFICATES UNDER VAT ETC IN RESPECT OF PURCHASES IN QUESTION. HENCE THE ID. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. IN THE REMAND REPORT, THE AO SUBMITTED THAT, OUT OF FIVE PARTIES REFERRED ABOVE, THREE PARTIES, VIZ., (A) M/S ROSHAN STEEL IMPEX, (B) M/S VIRAJ STEEL AND ALLOYS AND C) M/S SHIVNM METAL S INDUSTRIES APPEAR IN THE LIST OF HAWALA OPERATORS PREPARED BY THE SALES TAX. DEPARTMENT. THE AO FURTHER SUBMITTED THAT HE HAS OBTAINED BANK STATEMENTS OF ALL THE FIVE PARTIES AND THE PERUSAL OF THE SAME SHOWS THAT THEY HAVE WITHDRAWN THE AMOUNTS IN CASH AS SOON AS THE CHEQUES ISSUED BY TLIE ASSESSEE WERE REALIZED. THE AO ALSO PLACED RELIANCE ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF DOT V/S PHOOLWATI DEVI (2009) 314 ITR AT I (DELHI) AND ALSO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SUMAN DAYAL V/S CIT (1995) 214 ITR 801(SC). ACCORDINGLY, THE AO STOOD BY THE ASSESSMENT ORDER. THE AO FURTHER OBSERVED THAT IF AT ALL THE PURCHASES WERE CONSIDERED TO HAVE BEEN MADE FROM ANY OTHER PARTY, THE SAME WOULD HAVE BEEN SOURCED OUT OF UNDISCLOSED INCOME OF THE ASSESSEE, IN WHICH CASE THE PROVISIONS OF SEC. 69C OF THE ACT WOULD BE ATTRACTED. EVEN THOUGH THE ASSESSEE FURNISHED A DETAILED REPLY IN RESPONSE TO THE REMAND REPORT AND ALSO PLACED RELIANCE ON VARIOUS CASE LAW, YET THE ID. CIT( A) CONCURRED WITH THE VIEW TAKEN BY THE AO. THE ID. CIT(A) ALSO CONCURRED WITH THE VIEW OF AO THAT THE ASSESSEE WOULD HAVE MADE PURCHASE FROM THE GREY MARKET AND SUCH PURCHASES WOULD HAVE MADE IN CASH RESULTING IN VIOLATION OF THE PROVISIONS OF SECTION 40( A)(3) OF THE ACT. HE ALSO AGREED WITH THE VIEW TAKEN BY THE AO THAT ASSESSEE HAS NOT EXPLAINED THE SOURCES FOR MAKING SUCH PURCHASES AND HENCE THE AGGREGATE AMOUNT OF PURCHASES IS LIABLE TO BE ASSESSED AS UNEXPLAINED EXPENDITURE UNDER THE PROVISIONS ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 20 OF SEC TION 69C OF THE ACT. ACCORDINGLY, THE ID. CIT(A) CONFIRMED THE ADDITION MADE BY AO ON THIS ISSUE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND PERUSED THE RECORD. THE - AO PLACED RELIANCE ON THE WRITTEN SUBMISSIONS FURNISHED BEFORE THE ID. CIT( A) WHEREAS THE LD.:DR : PLACED STRONG RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. WE NOTICE THAT THE ASSESSEE HAS FURNISHED FOLLOWING REPLY IN RESPONSE TO THE REMAND REPORT FURNISHED BY AO: '3.2 IN THIS RESPECT, THE APPELLANT'S SUBMISSIONS MADE DURING THE APPEAL PROCEEDINGS ARE AS UNDER: ' WE ARE IN RECEIPT OF THE REMAND REPORT DATED 21.12.2012 ON 31.12.2012 1. THE ASSESSEE HAD FILED WRITTEN SUBMISSIONS, PAPER BOOK AND APPLICATION FOR ADDITIONAL EVIDENCE U/R 46A BEFORE YOUR HONOUR THE MATTER WAS REMANDE D TO THE AO FOR A REPORT VIDE LETTER DATED 12.9.2012. THE ASSESSEE HAD FILED FURTHER DETAILS BEING LEDGER ACCOUNT OF SUNDRY CREDITORS SUBSEQUENTLY PAID DULY HIGHLIGHTED IN THE BANK STATEMENT, IN THE REMAND PROCEEDINGS. 2,. ON PERUSAL OF THE REMAND REPORT I T IS SEEN THAT THE AO IN PARA 6 STATES THAT OUT OF THE 5 PARTIES, THREE PARTIES ARE HAWALA OPERATORS. THE AO HOWEVER ACCEPTS THE EXISTENCE OF PARTIES ON ENQUIRY WITH THE BANKS (REFER 9 ON PAGE 4 OF THE REMAND REPORT) 3. THE ASSESSEE RESPECTFULLY SUBMITS TH AT ; A. THE ASSESSEE IS PROPRIETOR OF M/S GURURAJ METALS, WHICH IS ENGAGED IN THE BUSINESS OF SUPPLY FERROUS AND NON - FERROUS METALS TO SMALL SCALE INDUSTRIES. FOR THE RELEVANT PREVIOUS YEAR, THE. ASSESSEE HAS DECLARED GP OF 4.48% AND NP OF 1.01 % ON THE TU RNOVER RS.4,36,53,266/ - (PG. 1 - 33 OF THE WRITTEN SUBMISSIONS) AS COMPARED TO THE SAME, THE ASSESSEE HAD, IN THE IMMEDIATELY PRECEDING YEAR, DECLARED GP OF 4.36% AND NP OF 1.02% ON THE TURNOVER FOR THAT YEAR. IN THE P/L ACCOUNT, THE ASSESSEE HAS CREDITED SA LES OF RS.4,36,53,266. THE ASSESSEE HAS DECLARED NET PROFIT OF RS. 4,42,515/ - FROM HIS PROPRIETARY CONCERN, M/S GURURAJ METALS. THE ASSESSE IS REGISTERED UNDER MVAT AND FILING THE VAT RETURNS REGULARLY. VARIOUS JUDICIAL PRONOUNCEMENTS HAVE BEEN SUBM ITTED TO YOUR HONOUR VIDE PAPER BOOK 1 B..DURING THE COURSES OF ASSESSMENT PROCEEDINGS, THE AO HAD ISSUED NOTICE U/S 133 (6) TO 23 PARTIES. OUT OF THE SAME IN CASE OF 5 PARTIES THE NOTICE CAME BACK AS NOT KNOWN. THE AO HELD THAT THE AGGREGATE PURCHASE OF RS. 1,74,01,436/ - ARE BOGUS PURCHASE. THE AO HAS RELIED ON THE COPY OF INSPECTOR REPORT WHEREIN IT WAS SUBMITTED THAT PARTIES WERE NOT IN EXISTENCE AT THE ADDRESS. D. THE ASSESSEE SUBMITS THAT THE PARTIES CONFIRMATION BEAR THEIR PAN NOS. AND INVOICE COPY BEARS THEIR VAT NOS. AND ADDRESS. THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE. THUS THE ASSESSEE HAD DISCHARGED THE PRIMARY ONUS OF PROOF BY PROVING THE IDENTITY OF PARTY AND GENUINENESS OF THE TRANSACTIONS. E. THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE S IN PAPER BOOK - IL AS UNDER : 1 - TIN ALLOTMENT LETTER IN CASE OF MONTEXLNDS. 265 - 266 2 ACKNOWLEDGMENT OF FILING E RETURNS WITH SALES TAX DEPARTMENT ALONGWITH REGISTRATION UNDER CST IN CASE OF ROHAN STEEL IMPEX. 267 - 268 3 ACKNOWLEDGMENT OF FILING E RETU RNS WITH SALE TAX CHALLANS IN ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 21 CASE OF MOKSH METAL TUBES F 269~270 4 ACKNOWLEDGEMENT OF FILING E RETURNS WITH SALES TAX AND CERTIFICATE OF REGISTRATION UNDER CST AND VAT IN CASE OF VIRAJ STEEL ALLOYS 271 - 272 5 ACKNOWLEDGEMENT OF FILING E RETURNS WITH SALES TAX AND CERTIFICATE OF REGISTRATION UNDER CST IN CASE OF SHIVAM METALS 273 - 275 6 LETTERS FROM RBS BANK FOR CLEARING OF CHEQUES IN NAMES OF 5 PARTIES, DATED 6.8.2012, U.8.12;25.6,12,18.7.12,17.7.12 276.303 7 BANK STATEMENT DULY CERTIFYIN G THE PAYMENTS BEEN MADE TO PARTIES 304 8 CERTIFICATE FROM DEPART OF SALES TAX SHOWING CANCELLATION OF REGISTRATION BY THE PARTIES 305 - 309 9 LEDGER ACCOUNT OF HAMALI AND CARTAGE EXP. ALONG WITH VOUCHERS 310 - 318 F. THE DETAILS OF PURCHASE AND SALES WERE SUB MITTED THIS ONCE THE SALES ARE ACCEPTED THE PURCHASES CANNOT BE DOUBTED. WITHOUT PREJUDICE TO ABOVE ONCE PAYMENT ARE MADE BY ACCOUNT PAYEE CHEQUES NO DISALLOWANCE COULD BE MADE MERELY BECAUSE PARTIES ARE NOT FOUND. THE ADDITIONAL EVIDENCE PRODUCE IN FORM O F BANK CERTIFICATE AND E RETURNS SALES TAX PROVE THE EXISTENCE OF THE PARTIES G. FURTHER PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. THIS FACT WOULD OVER SHADOIV ALL OTHER SHORT COMING A. MATHER & PLATT (INDIA) LTD.VS CIT 168 ITR 493 CAT ASSESSEE MADE PAY MENTS TO ITS TWO COMMISSION AGENTS THROUGH BANK DRAFT AND ACCOUNT PAYEE CHEQUE RESPECTIVELY. DURING ASSESSMENT PROCEEDINGS, SUMMONS U/S 131 WERE ISSUED AFTER FOUR YEARS OF AFOREMENTIONED TRANSACTION TO EACH OF SAID COMMISSION AGENTS CALLING UPON T HEM TO CONFIRM THOSE PAYMENTS - SUMMONS CAME BACK WITH REMARK 'NOT KNOWN' FI - OM POSTAL AUTHORITIES - WHETHER TRIBUNAL WAS RIGHT IN HOLDING THAT ASSESSE HAD FAILED TO DISCHARGES ONUS OF ESTABLISHING IDENTIFICATION OF THESE TWO COMMISSIONS AGENT - HELD NO. ITO V /S KASHMIR IND. PALACE 99 TAXRNANN (CHD) (MAG) AO MADE ADDITION OFRS.52,250 TREATING CERTAIN PURCHASE AS BOGUS AS PARTY WAS NOT PRODUCED FOR VERIFICATION - WHETHER SINCE PAYMENTS WERE MADE THROUGH ACCOUNT - PAYEE CHEQUE AND AMOUNTS HAD GONE INTO ACCOUNT OF PAR TY CONCERNED AS DULY CERTIFIED BY BANK AND ASSESSE ALSO HAD SURRENDERED RS.50,000/ - DURING SURVEY AS EXCESS STOCK. AO COULD NOT TREAT SUCH PURCHASE AS BOGUS - HELD, YES.C. RAMANANDSAGAR V/S DCIT 256 ITR 134 (BOM) ASSESSEE FILED HIS RETURN AND CLAIMED DEDUCT ION OF EXPENSES ON ACCOUNT OF EQUIPMENT HIRE CHARGES PAID TO FIVE DIFFERENT PARTIES - AO NOT BEING SATISFIED WITH PROOF PRESENTED IN RESPECT OF TWO PARTIES 'ND' AND 'VF' MADE DISALLOWANCE OF PAYMENTS MADE TO SAID TWO PARTIES - WHETHER XEROX COPIES OF BILL S AND VOUCHER PRODUCED TO ESTABLISH GENUINENESS AND RENSONABLENESS OF TOTAL PAYMENTS MADE IN FAVOUR OF 'ND' BEING NOT SATISFACTORY, DISALLOWANCE OF PAYMENT MADE TO 'ND' WAS JUSTIFIED - HELD YES - WHETHER SINCE CERTIFICATE PRODUCED BY ASSESSEE F ROM HIS BANKER ESTABLISHED THAT PAYMENTS WERE MADE TO SAID PARTY 'VF' &Y ACCOUNT PAYEE CHEQUES, IT OVERSHADOWED ALL OTHER SHORTCOMINGS SOUGHT TO BE POINTED OUT BY AUTHORITIES WHILE DISALLOWING EXPENDITURE INCURRED BY ASSESSEE AND, HENCE, DISALLOWANCE OF PA YMENT BY WAY OF HIRE CHARGES MADE TO 'VF' WAS NOT JUSTIFIED - HELD, YES. H. THE ASSESSEE FURTHER SUBMITS THAT THE DETAILS OF TOTAL PURCHASE AND TOTAL ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 22 SALES QUANTITY WISE AND DATE WISE WAS FURNISHED BEFORE THE AO. I. IT MAY ALSO NOT BE OUT OF PLACE TO MENTION THAT THE PARTIES ARE FILING E - RETURN OF SALES - TAX AND THE ACKNOWLEDGEMENT ARE PRODUCE. IN VIEW OF THE ABOVE FACTS THE ASSESSEE HAS DISCHARGED THE NOUS OF PROOF, THEREFORE NO ADDITION SHOULD BE MADE. WITHOUT PREJUDICE TO ABOVE IF AT ALL THE ADDITION CAN BE SUSTAINED THEN IT SHOULD BE AT NET PROFIT RATIO IN RESPECT OF PURCHASE. FURTHER ONCE QUANTITATIVE TALLY OF SALES IS FURNISHED, THE SAME SHOULD BE ACCEPTED (PG.78 - 107 OF THE WRITTEN SUBMISSIONS). IT IS NOT OPEN FOR AO TO DISREGARD THE SAME. A. BABULAL C B ORANA V/S ITO 282 1TR 251 (BOM) WHERE THE IDENTITY OF THE PERSONS FROM WHOM GOODS ARE PURCHASES HAS BEEN EXPLAINED, PAYMENT ARE MADE BY ACCOUNT PAYEE CHEQUES, TRANSACTIONS ARE RECORDED IN BOOKS, NO ADDITION CAN BE MADE.. ITO V/S SUHANA TRADING 92 ITD 212 ( M.UM)(PARA 98) WHERE A QUANTITATIVE TALLY OF SALES IS FURNISHED, EVEN IF PURCHASERS ARE NOT AVAILABLE, NO ADDITION COULD BE MADE MERELY ON ASSUMPTIONS OR PRESUMPTIONS OR SURMISES OR CONJECTURES. C, CIT V/S LEADERS VALVES (P) LTD 206 CTR 463(P&H) COMMISSION ER (A) DELETED ADDITIONS MADE BY AO ON ACCOUNT OF BOGUS PURCHASE FROM SEVEN PARTIES AS ALSO ADDITION IN TRADING ACCOUNT BESIDES ALLOWING TRIPLE SHIFT ALLOWANCE ON MACHINERY ETC TRIBUNAL CONCURRED, WITH ANALYSIS AND CONCLUSION DRAWN BY COMMISSIONER (A) ON A PPRECIATION OF MATERIAL ON RECORD, AFTER TAKING NOTICE OF FACT THAT TRADING RESULTS OF ASSESSEE HAD ALL ALONG BEEN ACCEPTED AND PURCHASES OJ SCRAP FROM SEVEN PARTIES COULD ALSO BE NOT TERMED AS BOGUS FOR REASON THAT IN SUBSEQUENT ASSESSMENT YEAR PURCHASE F ROM THOSE VERY PARTIES STOOD ACCEPTED BY DEPARTMENT TO A VERY SUBSTANTIAL EXTENT - TRIBUNAL ALSO TOOK NOTICE OF REVENUE'S CONTRADICTORY STAND IN AS MUCH AS FIRSTLY SPECIFIC ADDITIONS WERE MADE IN ASSESSMENT ON ACCOUNT OF ALLEGED BOGUS PURCHASE AND THEN ASSE SSEE'S BOOKS WERE REJECTED ON GROUND THAT THOSE WERE NOT VERIFIABLE, BUT ADJUSTMENT OF BOGUS PURCHASES WAS MADE WHILE WORKING OUT GROSS PROFITS MID THAT TOO ON BASIS OF 'SALES VERSION' IN THOSE VERY BOOKS THOUGH WITH A SLIGHT MODIFICATION . WHETHER BRIEF CA PITULATION OF FINDINGS OF FACTS RETURNED BY TRIBUNAL LED ; TO AN IRRESISTIBLE CONCLUSION THAT THESE WERE PURE FINDINGS OF FACT GIVING RISE TO NO QUESTION O F LAW HELD, YES D. RAJESH P SOM V/S ACIT 100 TTJ 892 (AHD) W H ERE PURCHASES ARE PROPERLY RECORDED IN BOOKS OF ACCOUNT AND SUPPORTED BY AUTHENTICATED PURCHASES BILLS/ VOUCHES PAYMENTS WERE MADE THROUGH BANKING CHANNEL, THE SALES AGAINST THESE PURCHASES NOT DOUBTED. NO ADDITION CAN BE MADE MERELY BECAUSE HE SUPPLIERS CANNOT BE LOCATED, E, CIT V/S M K BROTHE RS (1987) 163 ITR 249 (GUJ) IN RELEVANT ASSESSMENT YEAR ASSESSEE MADE CERTAIN PURCHASES FROM SOME PARTIES AND MADE PAYMENT THROUGH CHEQUES - JTO FOUND THAT PARTIES WERE NOT AVAILABLE TO CROSS - EXAMINE AND THAT THROUGH PURCHASES RECLAIMED TO HAVE BEEN MADE ON CREDIT BASIS, PAYMENTS WERE SHOWN TO HAVE BEEN MADE AFTER SUBSTANTIAL LAPSE OF TIME AFTER DATE OF PURCHASE - ITO HELD THOSE TRANSACTIONS TO BE BOGUS AND ADDED BACK AMOUNT SPENT ON PURCHASE AS INCOME OF ASSESSEE WHETHER TRIBUNAL WAS JUSTIFIED IN DELETING AFO RESAID ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 23 ADDITION TO INCOME OF ASSESSEE ON GROUND THAT THERE WAS NOT EVIDENCE TO SHOW THAT VOUCHERS GIVEN BY THOSE PARTIES TO ASSESSEE WERE BOGUS OR THAT ANY PART OF THOSE PAYMENTS CAME BACK TO ASSESSEE - HELD, YES.WWW.TAXGURU.IN 8 I.T.A. NO.2826/MUM/2013 K. I N THE REMAND REPORT, THE ID.AO HAS MENTIONED THAT NOTICES U/S 133 (6) WERE ISSUED TO BANK OF BARODA, V P ROAD BRANCH AND ABN AMRO, FORT BRANCH. IN RESPONSE TO THE SAID NOTICES, BANK OF BARODA HAS PROVIDED, THE DETAILS OF FOUR PARTIES I.E. M/S MONTEX INDUST RIES, M/S VIRAR STEEL AND ALLOYS, M/S SHIVAM METAL INDUSTRIES AND M/S ROHAN STEEL IMPEX SINCE THESE PARTIERS WERE HAVING ACCOUNT WITH THE SAID BANK. THE ID. AO HAS ALSO MENTIONED THAT THE BANK STATEMENTS OF THE ABOVE PARTIES PROVIDED BY THE BANK OF BARODA, SHOULD THAT THERE WAS AN IMMEDIATE CASH WITHDRAWAL AGAINST THE CHEQUE DEPOSITS. YOUR HONOUR'S ATTENTION IS DRAWN TO THE FACT THAT BANK OF BARODA HAD PROVIDED TLIE NECESSARY DETAILS OF THE FOUR PARTIES WITH RESPECT TO THE DATE OF OPENING ACCOUNT NUMBERS, BANK STATEMENTS ETC. THE EXISTENCE OF THESE PARTIES IS THUS JUSTIFIED BY AN EXTERNAL INDIRECT CONFIRMATION OBTAINED BY THE ID. AO. SINCE THE BANKS HAVE MANDATED THE KYC DOCUMENTS, THE EXISTENCE OF THESE PARTIES CANNOT BE RULES OUT MERELY ON THE REPORT OF THE INSPECTOR. THE ASSESSEE CANNOT BE PENALIZED IF THE OTHER PARTY ENTERS IN ANY DUBIOUS TRANSACTIONS. THE ASSESSEE AS A PURCHASE IS CONCERNED WITH THE GOODS AND THE ONLY OBLIGATION REMAINS IS TO MAKE THE PAYMENT. SINCE THE ASSESSEE DOES NOT HAVE TO RECOVE R MONEY FROM THESE PARTIES, HENCE HE IS NOT REQUIRED TO CONFIRM ON THEIR CREDITWORTHINESS. MOREOVER THE ASSESSEE CANNOT SIT OVER AND INVESTIGATE THE GENUINENESS OF THE PARTY OR THEIR BUSINESS TRANSACTION. THE ASSESSEE AS A BUSINESS MAN TAKEN DUE CARE IN G ETTING NECESSARY DETAILS WHICH WERE PRODUCED BEFORE YOUR AS WELL AS THE A 0 DU RING ASSESSMENT AS WELL AS REMAND PROCEEDINGS. L. AS REGARD ATTRACTION OF PROVISION OF SECTION 40(3) IS CONCERNED IT IS APPLICABLE TO CASH PAYMENTS. THE SAID SECTION STALES AS U NDER : 'WHERE THE ASSESSE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT OR AGGREGATE OF PAYMENT MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR AN ACCOUNT PAYEE BANK DRAFTS EXCEEDS TWENTY THOUSAND RUPEES, NO DED UCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE ' IN THE FACTS OF THE PRESENT CASE THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE. THE ASSESSEE HAS SUBMITTED THE LETTERS FROM RBS BANK FOR CLEARING OF CHEQUES IN NAMES OF 5 PARTIES, THUS MERELY ON PRE SUMPTIONS AND ASSUMPTIONS THE PROVISIONS OF SECTION 40A(3) CANNOT BE INVOKED. MERELY BECAUSE THE PARTIES ARE NOT TRACEABLE THE ASSESSEE CANNOT BE PENALIZED FOR THE SAME. M. AS REGARD INVOKING THE PROVISIONS OF SECTION 69C IS CONCERNED, THE SAID SECTION RED S AS UNDER: 'WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND OFFERS NO EXPLANATION, IF ANY, OFFERED BY HIM IS NOT IN THE OPINION OF THE AO, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, D EEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR) (PROVIDED THAT NOTWITHSTANDING, ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 24 SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME'] THE ASSESSEE HAS GIVEN EXPLANATION AND ALSO PROVIDED SUFFICIENT EVIDENCE IN SUPPORT OF ITS CLAIM. THE ASSESSEE HAS NOT ONLY PROVED THE PURCHASE BUT THE CORRESPONDING SALES ALSO. THE PRIMARY ONUS OF PROOF HAS BEEN DISCHA RGED BY THE ASSESSEE. MERELY, ON PROHIBITING, THE PROVISION OF SECTION 69 CANNOT BE INVOKED. N. IT IS SUBMITTED THAT UNDER IT ACT THERE IS NO SCOPE FOR ASSUMPTION AND PRESUMPTIONS NOR ANYTHING CAN BE IMPLIED. ADDITION CANNOT BE SUSTAINED ON THE BASIS OF PR EPONDERANCE OF PROBABILITIES. SUSPICION HOWEVER STRONG IT MAY MERELY ON SUSPICION SURMISES AND CONJECTURES IN THE HANDS OF THE ASSESSEE' 7. A PERUSAL OF THE ORDERS PASSED BY THE TAX AUTHORITIES WOULD SHOW THAT THEY HAVE SUSPECTED THE GENUINENESS OF THE PU RCHASES ONLY FOR THE REASON THAT THE ABOVE SAID FIVE PARTIES WERE NOT AVAILABLE IN THE GIVEN ADDRESSES. IT IS PERTINENT TO NOTE THAT THE AO HIMSELF, DURING THE COURSE OF REMAND PROCEEDINGS, HAVE OBTAINED THE BANK STATEMENTS OF THE ABOVE SAID FIVE PARTIES I S IN THE COMMON KNOWLEDGE OF EVERYBODY THAT THE BANK ACCOUNT, NOW A DAYS, COULD BE OPENED ONLY ON SUBMISSION OF PROPER DOCUMENTS . FURTHER THE ASSESSEE HAS FURNISHED THE SALES TAX DOCUM ENTS OF THE ABOVE SAID FIVE PARTIES AND ALSO THEIR INCOME TAX DETAILS TO PROVE THEIR EXISTENCE. THUS, IT IS SEEN THAT THE ASSESSES HAS FURNISHED MANY DOCUMENTS TO PROVE THE EXISTENCE OF THE PARTIES AND THEY HAVE NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. 8. BE THAT AS IT MAY, ANOTHER IMPORTANT FACTOR THE BANK ACCOUNT COP IES COLLECTED BY THE ASSESSING OFFICER SHOWS THAT THE ASSESSES HAD MADE THE PAYMENTS TO THE ABOVE SAID PARTIES BY WAY OF ACCOUNT PAYEE CHEQUES. THUS, IT IS SEEN THAT THE TRANSACTIONS HAVE BEEN ROUTED THROUGH THE BANK ACCOUNTS. FURTHER, IT IS NOT THE CASE O F THE ASSESSING OFFICER THAT THE ASSESSEE HAS INDULGED IN ACCOUNTING OF BOGUS PURCHASES. WLIEN THE ASSESSEE SUBMITTED THAT HE COULD NOT HAVE EFFECTED THE SALES WITHOUT MAKING CORRESPONDING PURCHASES, THE AO HAS TAKEN THE VIEW THAT THE ASSESSEE COULD HAVE EFFECTED PURCHASES IN THE GREY HTTP://WWW.ITATONLINE.ORG 10J.T.A. NO,2826/MUM/2013 MARKET, WHICH CONCLUSION IS, IN FACT, NOT SUPPORTED BY ANY MATERIAL. UNDER THIS IMPRESSION ONLY, THE AO HAS FURTHER EXPRESSED THE VIEW THAT THE ASSESSEE WOULD HAVE PURC HASED THE MATERIALS BY PAYING CASH THUS VIOLATING THE PROVISIONS OF SEC. 40A(3) OF THE ACT, WHICH IS AGAIN BASED ON ONLY SURMISES. IN THE ABSENCE OF ANY MATERIAL TO SUPPORT THE SAID VIEW, WE ARE UNABLE TO AGREE WITH THE VIEW TAKEN BY THE TAX AUTHORITIES TH AT THE PURCHASES AMOUNT IS LIABLE TO BE DISALLOWED U/S 40A(3) OF THE ACT. ON THE SAME IMPRESSION ONLY, THE AO HAS EXPRESSED THE VIEW IN THE REMAND REPORT THAT THE PURCHASES AMOUNT IS ALSO LIABLE TO ASSESSED U/S 69C OF THE ACT AS THE SOURCE OF PURCHASES WER E NOT PROVED. AGAIN THE SAID CONCLUSION IS BASED UPON ONLY SURMISES, WHICH COULD NOT BE ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 25 SUSTAINED. THUS, IT IS SEEN THAT THE ASSESSING OFFICER HAS ACCEPTED THE FACT THAT THE QUANTITY DETAILS OF PURCHASES AND SALES HAVE BEEN RECONCILED BY THE ASSESSEE. FURT HER, VARIOUS CASE LAW RELIED UPON BY THE ASSESSEE ALSO SUPPORTS HIS CASE. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF PURCHASES. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THI S ISSUE AND DIRECT THE AO TO DELETE THE DISALLOWANCE OF PURCHASES. (IV)IN THE CASE OF CASE OF SHRIRAMILAPMVIN SHAH - ITA NO, 5246/MUM/2Q13 ORDER DATED 05.03.2015 A. Y, 2010 - 11 WHEREIN THE JURISDICTIONAL ITAT, MUMBAI HELD AS UNDER - ' THE APPEAL OF THE REVE NUE IS DIRECTED AGAINST THE ORDER DATED 21/05/2013 PASSED BY THE LD. CIT (A) - 35, MUMBAI AND IT RELATES TO ASSESSMENT YEAR 2010 - 11. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF ID.CLT(A) IN DELETING THE DISALLOWANCE OF RS.28.08 LAKHS RELATING TO UNEXPLAIN ED EXPENDITURE MADE U/S 69C OF THE INCOME TAXACT, 1961 THE ACT). 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION UNDER THE NAME AND STYLE OF M/S KAILASH CONSTRUCTION CO. THE TOTAL PURCHASE EXPE NDITURE CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS RS.8,62,68,891/ - . THE AO NOTICED THAT THE SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA HAS LISTED OUT NAMES OF CERTAIN DEALERS, WHO WERE ALLEGED TO HAVE BEEN PROVIDING ACCOMMODATI ON ENTRIES WITHOUT DOING ACTUAL BUSINESS. THE AO NOTICED THAT THE ASSESSEE MADE PURCHASES TO THE TUNE OF RS.28.08 LAKHS FROM SOME OF THE PARTIES, WHOSE NAMES FOUND PLACE IN THE LIST PROVIDED BY THE SALES TAX DEPARTMENT. THE AO ALSO CONSIDERED THE STATEMENT S TAKEN BY SALES TAX DEPARTMENT FROM SOME OF THE PARTIES. DURING THE COURSE OF HEARING, THE AO DEPUTED INSPECTOR OF INCOME TAX TO SERVE NOTICE U/S 133(6) OF THE ACT. HOWEVER, THE INSPECTOR REPORTED THAT THESE PARTIES WERE NOT AVAILABLE AT GIVEN ADDRESS. TH E AO ALSO ASKED THE ASSESSEE TO SUBMIT DELIVERY CHALLANS AND STOCK REGISTER TO PROVE THE MOVEMENT OF STOCK AND ALSO ASKED TO PRODUCE THESE PARTIES. HOWEVER, THE ASSESSEE FAILED TO FURNISH THE DETAILS CALLED FOR. HENCE, BY PLACING THE RELIANCE ON THE STATEM ENTS GIVEN BY THESE PARTIES BEFORE THE SALES TAX DEPARTMENT, THE AO TOOK THE VIEW THAT THE PURCHASES TO THE TUNE OF RS.28.08 LAKHS HAVE TO BE TREATED AS UNEXPLAINED EXPENDITURE. ACCORDINGLY, HE ASSESSED THE SAME U/S 69C OF THE ACT. 4. THE ID. CIT(A) DELETED THE ADDITION AND HENCE THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE ID, DR STRONGLY PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 26 6. ON THE OTHER HAND, THE ID. AR SUBMITTED THAT THE ADD ITIONS MADE IN THE CASE OF SOME OTHER ASSESSES ON IDENTICAL REASONS HAVE BEEN DELETED BY THE CO - ORDINATE BENCHES OF THE TRIBUNAL IN THE - FOLLOWING CASES : A) RAMESH KUMAR AND CO \ $/S AOT IN ITA NO.2959/MUM/2014 (AY - 20W - 11) DATED 28.11.2014; B) DCIT V/S SHRI RAJEEV G. KALATHIL IN ITA NO.6727/MUM/2012 (AY - 2009 - 10) DATED 20.8.2014;AND C) SHRI GANPATRAJ A SANGHAVI V/S ACIT IN ITA NO. 2826/MUM/2013 (AY - 2009 - 10) DATED 5,11.2014 IN ALL THE ABOVE SAID CASES, THE CO - ORDINATE BENCHES OF THE TRIBUNAL HAS HELD THAT THE A O WAS NOT JUSTIFIED IN MAKING THE ADDITION ON THE BASIS OF STATEMENTS GIVEN BY THE THIRD PARTIES BEFORE THE SALES TAX DEPARTMENT, WITHOUT CONDUCTING ANY OTHER INVESTIGATION, IN THE INSTANT CASE ALSO, THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION ON THE BASIS OF STATEMENTS GIVEN B \ J THE PARTIES BEFORE THE SALES TAX DEPARTMENT. WE NOTICE THAT THE ID.CIT(A) HAS PROPERLY ANALYSED THE FACTS PREVAILING IN THE INSTANT CASE AND FOR THE SAKE OF CONVENIENCE, WE EXTRACT THE SAME BELOW: - A) 5.3.11. I HAVE ALSO GON E THOUGH THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE LD AR AND FIND THAT THE FACTS OF THE ABOVE REFERRED JUDICIAL PRONOUNCEMENTS ARE SIMILAR TO THE PRESENT FACTS OF THE CASE AND, THEREFORE THE RATIO OF JUDGMENTS OF THE ABOVE REFERRED TWO CASES ARE FULLY APPLICABLE IN THE PRESENT CASE. FURTHER, I HAVE ALSO TAKEN INTO CONSIDERATION THE DECISION OF JURISDICTIONAL HIGH COURT AND ITAT I.E. THE COMMISSIONER OF INCOME TAX - 1 MUMBAI VS NIKUNJ EXIMP ENTERPRISES PVT. LTD. APPEAL NO ITA NO. 5604 OF 2010 (HON. MUMB AI HIGH COURT) AND BALAJI TEXTILE INDUSTRIES (P) LTD. VS INCOME TAX OFFICER (1994) 49 ITD (BOM) 177. WHILE IN THE CASE OF NIKUNJEXIMP ENTERPRISES, THE HON*BLE BOMBAY HIGH COURT IN ITS LATEST JUDGMENT HAS HELD THAT ONCE THE SALES ARE ACCEPTED, THE PURCHASES CANNOT BE TREATED AS INGENUINE IN THOSE CASES WHERE THE APPELLANT HAD SUBMITTED ALL DETAILS OF PURCHASES AND PAYMENTS WERE MADE BY CHEQUES, MERELY BECAUSE THE SELLERS/SUPPLIERS COULD NOT BE PRODUCED BEFORE THE A.O. BY THE ASSESSES. FURTHER, I HAVE ALSO GO NE THROUGH THE JUDGMENT IN CASE BALAJI TEXTILE INDUSTRIES (P) LTD, VS INCOME TAX OFFICER BY HON. ITAT, MUMBAI (1994) 49 ITD (BOM) 177 WHICH WAS MADE AS LONG BACK AS 1994 - AND WHICH STILL HOLDS GOOD IN WHICH WAS HELD THAT - 'ISSUING PRINTED BILLS FOR SELLING THE TEXTILE GOODS TO THE ASSESSEE - COMPANY AT BHIWANDI WAS NOT A CONCLUSIVE PROOF BUT IT WAS A PRIMA FADE PROOF TO ARRIVE TO A CORRECT CONCLUSION THAT THE ASSESSEE PURCHASED CERTAIN GOODS FROM CERTAIN PARTIES AT BHIWANDI. THE ASSESSEE SOLD THOSE GOODS TO ' S' AND ADJUSTED THE SALE PROCEEDS AGAINST THE LOAN TAKEN BY IT FROM THAT PARTY. THE ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 27 ASSESSEE'S BOOKS OF ACCOUNT AND THE BOOKS OF ACCOUNT OF AND THE BOOKS OF ACCOUNT OF S IN WHICH THE ENTRIES OF SALE AND ADJUSTMENT WERE MADE, COULD NOT BE DISCARDED MERELY BY SAYING THAT THEY WERE NOT GENUINE ENTRIES THOUGH NEITHER THE ASSESSING OFFICER NOR THE COMMISSIONER (APPEALS) OPINED ANYTHING IN RESPECT OF THOSE ENTRIES. FURTHER, THE PURCHASE OF THE GOODS IN THE MONTH OF MARCH 1935 DID NOT MAKE ANY DIFFERENCE. THE AS SESSEE MIGHT NOT HAVE CARRIED ON ANY BUSINESS ACTIVITIES PRIOR TO MARCH 1985, BUT THAT DID NOT MEAN THAT THE ASSESSEE WAS NOT ENTITLED TO CARRY ON THE BUSINESS ACTIVITY IN MARCH 1985. THEY COULD NOT BE COMPELLED TO CARRY ON THE BUSINESS ACTIVITY THROUGHOUT THE YEAR. THERE WERE NO GOOD REASONS TO DISBELIEVE THE SALES MADE BY THE ASSESSEE TO 'S'. NO SALES WERE LIKELY TO BE EFFECTED IF THERE WERE NO PURCHASES. A SALE COULD BE MADE IF THE GOODS WERE AVAILABLE WITH THE SELLER. FROM ALL THESE FACTS ON RECORD, A REASONABLE AND CONVINCING INFERENCE WHICH COULD BE DRAWN, WAS THAT THE ASSESSEE PURCHASED THE TEXTILE GOODS, SOLD THEM AND ADJUSTED THE SAME TOWARDS THE LOAN TAKEN BY IT. THEREFORE, THE ASSESSEE WAS ENTITLED TO GET THE ENTIRE DEDUCTION.' I HAVE ALSO TAKEN INTO CONSIDERATION, THE G.P RATIO/G.P. MARGIN OF THE APPELLANT IN THE PREVIOUS A.Y. AS WELL AS SUBSEQUENT ASSESSMENT YEAR. IF THE ADDITION MADE BY THE A.O. IS ACCEPTED, THEN G.P. RATIO OF THE APPELLANT DURING THE PRESENT A.Y. WILL BECOME ABNORMALLY HIGH A ND THEREFORE THAT IS NOT ACCEPTABLE BECAUSE IT ONUS OF THE A.O. BY BRINGING ADEAUATE MATERIAL ON RECORD TO PROVE THAT SUCH A HIGH G.P. RATIO EXISTS IN THE NATURE OF BUSINESS CARRIED OUT BY THE APPELLANT. FURTHER, IT HAS TO BE APPRECIATED THAT (I)PAYMENTS W ERE THROUGH BANKING CHANNEL AND BY CHEQUE,(II) NOTICES COMING BACK, DOES NOT MEAN , THOSE PARTIES ARE BOGUS, THEY ARE JUST DENYING THEIR BUSINESS TO AVOID SALES TAX/VAT ETC, (HI) STATEMENT BY THIRD PARTIES CANNOT BE CONCLUDED ADVERSELY IN ISOLATION AND WIT HOUT CORROBORATING EVIDENCES AGAINST APPELLANT,(IV) NO CROSS EXAMINATION HAS BEEN OFFERED BY AO TO THE APPELLANT TO CROSS EXAMINE THE RELEVANT PARTIES (WHO ARE DEEMED TO BE WITNESS OR APPROVER BEING USED BY AO AGAINST THE APPELLANT) WHOSE NAME APPEAR IN TH E WEBSITE WWW.RNAHAVAT.GOV.IN AND (V) FAILURE TO PRODUCE PARTIES CANNOT BE TREATED ADVERSELY AGAINST APPELLANT, IN VIEW OF THE FACTS DISCUSSED ABOVE AS WELL AS BINDING JUDICIAL PRONOUNCEMENTS OF THE JURISDICTIONAL ITAT MUMBAI BENCH AS WELL AS HON'BLE MUMB AI HIGH COURT AND OTHER LEGAL PRECEDENTS, THE ADDITION MADE BY THE AO AMOUNTING TO RS.28,08,071/ - CANNOT BE SUSTAINED/ACCORDINGLY, THE ADDITION OF RS.28,08,071/ - IS DELETED '' 7. HENCE A CONSPECTUS OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE ID.CIT(A) ON THIS ISSUE. ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 28 8. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED.' (V) IN THE CASE OF SHRI DEEPAK POPAILAL GALA V. ITO (ITA NO. 6203/MWN/2014 - AY 2010 - 11), JURISDICTIONAL ITAT OF MUMBAI AS HELD AS UNDER ; - 10. THE NEXT ISSUE RE LATES TO DISALLOWANCE MADE OUT OF PURCHASE AND ASSESSED U/S 69C OF THE ACT. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE TOTAL PURCHASE EXPENDITURE CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS RS. 73627S5/ - . THE AO NOTICED THAT THE S ALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA HAS LISTED OUT NAME OF CERTAIN DEALERS, WHO WERE ALLEGED TO HAVE BEEN PROVIDING ACCOMMODATION ENTRIES WITHOUT DOING ACTUAL BUSINESS. THE AO NOTICE THAT THE ASSESSEE MADE PURCHASES TO THE TUNE OF RS. 38.69 LA KHS FROM TWO PARTIES NAMED M/S UMII/A SALES AGENCY PVT. LTD. AND M/S MERCURY ENTERPRISES, WHOSE NAMES FOUND PLACE IN THE LIST PROVIDED BY THE SALES TAX DEPARTMENT. THE AO PLACED FULL RELIANCE ON THE ENQUIRIES CONDUCTED BY SALES TAX DEPARTMENT IN RESPECT IN SALES TAX DEPARTMENT IN RESPECT OF THE PARTIES, REFERRED ABOVE. ACCORDINGLY, THE AO TOOK THE VIEW THAT THE PURCHASES TO THE TUNE OF RS. 38.69 LAKHS HAVE TO BE TREATED AS UNEXPLAINED EXPENDITURE. ACCORDINGLY, HE ASSESSED THE SAME U/S 69C OF THE ACT. 11. TH E LD. CIT(A) DELETED THE ADDITION AND HENCE THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL, 12. THE ID. DR STRONGLY RELIANCE ON THE ORDER OF ASSESSING OFFICER. 13. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT THE ADDITION MADE IN THE CASE OTHER ASSESSES ON IDENTICAL REASONS HAVE BEEN DELETED BY THE CO - ORDINATE BENCHES OF THE TRIBUNAL IN THE FOLLOWING CASE : A) RAMESH KUMAR AND CO V/S ACIT IN ITA NO. 2959/MUM/2014(AY - 2010 - 11) DATED 28/11/2014; B) DCIT V/S SHRI RAJEEV G. KALATHIL IN ITA NO. 6727/MUM/2012(AY - 2009 - 10) DATED 20/08/2014;AND C) SHRI GANPATRAJ A. SANGHAVI V/S ACIT IN ITA NO. 2826/MUM/2013(AY - 2009 - 10) DATED 05/11/2014. IN ALL THE ABOVE SAID CASE, THE CO - ORDINATE BENCHES OF THE TRIBUNAL HAS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION ON THE BASIS OF STATEMENT GIVEN BY THE THIRD PARTIES BEFORE THE SALES TAX DEPARTMENT, WITHOUT CONDUCTING ANY OTHER INVESTIGATION. IN THE INSTANT CASE ALSO, THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION ON THE BASIS OF STATEMENT GIVEN BY THE PA RTIES BEFORE THE SALES TAX DEPARTMENT. WE NOTICE THAT THE ID. CIT (A) HAS TAKEN NOTE OF THAT NO SALES COULD BE AFFECTED WITHOUT PURCHASES. HE HAS FURTHER PLACED RELIANCE ON THE DECISION RENDERED BY HON'BLE GUJARAT HIGH COURT IN ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 29 THE CASE OF CIT VS. M. K. BROTHERS (163 ITR 249). HE HAS FURTHER RELIED UPON THE DECISION RENDERED BY THE TRIBUNAL IN THE CAES OF /TO VS. PREMANAND (2008) (25 SOT11)(JODH), WHEREIN IT HAS BEEN HELD THAT WHERE THE AO HAS MADE ADDITION MERELY ON THE BASIS OF OBSERVATIONS MADE BY T HE SALES TAX DEPT AND LIAS NOT CONDUCTED ANY INDEPENDENT ENQUIRIES FOR MAKING THE ADDITION ESPECIALLY IN A CASE WHERE THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS OF AND 6203/MUM /2013 SHOWING BOOKS OF ACCOUNT, PAYEE CHEQUE AND PRODUCING VOUCHERS FOR SALE OF GOODS, SUCH AN ADDITION COULD NOT BE SUSTAINED. THE LD. CIT (A)HAS ALSO APPRECIATED THE CONTENTIONS OF THE ASSESSEE THAT HE WAS NOT PROVIDED WITH AN OPPORTUNITY TO CROSS EXAMINE THE SELLERS, WHICH IS REQUIRED TO BE GIVEN AS PER THE DECISION OF HON'BLE K ERALA HIGH COURT IN THE CASE OF PONKUNNAM TRADERS (83 ITR 508 AND 102 ITR 366). ACCORDINGLY, THE LD CIT (A) HAS DELETED THE IMPUGNED ADDITION. ON A CAREFUL PERUSAL OF THE DECISION RENDERED BY LD CIT (A) WOULD SHOW THAT THE FIRST APPELLATE AUTHORITY HAS ANALYSED THE ISSUE IN ALL ANGLES AND APPLIES THE RATIO LAID DOWN BY HIGH COURTS AND TRIBUNALS IN DECIDING THIS ISSUE. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER ON THIS ISSUE.' (VI) IN THE CASE OF ACIT V. GV SONS (ITA NO.2239/M)N/2 012) AS OTHERS. THE JURISDICTIONAL ITAT OF MUMBAI AS HELD AS UNDER: - '17. WE HAVE HEARD THE ARGUMENTS AND HAVE PURSUED THE MATERIAL ON RECORD AND THE ORDER OF REVENUE AUTHORITIES. IT IS NOT IN DISPUTE THAT THE SURVEY ACTION WAS CONDUCTEDON A THIRD PARTY. I T IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAD BUSINESS RELATION WITH MOXDIAM GROUP, LIKE SO MANY OTHER PARTIES. IT IS ALSO A FACT THAT THERE IS NOT EVEN A IOTA EVIDENCE WITH THE AO, TO PROVE THAT THE ASSESSEE DID NOT HAVE STRAIGHT DEALINGS WITH MOXDIAM GR OUP. IT IS ALSO A FACT THAT, THAT THE ASSESSEE ENTERED EACH OF ITS TRANSACTION IN ITS PRIMARY BOOKS, COMPRISING OF LEDGER AND STOCK REGISTER. FROM THE ORDER OF THE AO, THE DR COULD NOT ESTABLISH BEFORE US THAT THE TRANSACTION AS RECORDED IN THE BOOKS WAS S HAM. WE CANNOT ACCEPT A BALD STATEMENT MADE BY THE AO 7 IT AS 2239 & 2240/M/2012 M/S G V SONS ITA 2238/M/2012 M/S G.V ZAVERI RAJPARA THAT ANY TRANSACTION/BUSINESS WAS ALSO INDULGING IN PROVIDING ACCOMMODATION ENTRIES. SIMPLY ON THE BASIS OF STATEMENT GIVEN BY THE THIRD PARTY, THAT THEY WERE ALSO PROVING ACCOMMODATION ENTRIES AS WELL, THE CONDUCT OF THE ASSESSEE CANNOT BE DOUBTED AND HELD TO BE SHAM. 18. THE ASSESSEE HAD CONDUCTED BUSINESS, THIS IS PROVED BY VARIOUS BOOKS OF ACCOUNT PRODUCED BEFORE THE AO WH ICH WERE ORIGINAL AND PRIMARY BOOKS AND NOT EVEN THE AFTERTHOUGHT OF THE ASSESSEE, WHICH HAS BEEN ACKNOWLEDGED BY THE AO. 19. IN SUCH A CIRCUMSTANCE, WE CANNOT SUSTAIN THE ADDITION AS MADE BY THE AO. WE, THEREFORE, SUSTAIN THE ORDER OF THE CIT(A), DELETIN G THE ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 30 ADDITION MADE, CONSEQUENTIALLY, THE GROUNDS AS RAISED BY THE DEPARTMENT ARE REJECTED. 20. IN THE RESULT, THE APPEAL, AS FILED BY THE DEPARTMENT IS DISMISSED.' (VII) IN THE CASE OF P ARM IT TEXTILES VS ITO, ITA NO.4012 TO 4015 & 4020 TO 4021/.THE JURISDICTIONAL ITAT OF MUMBAI AS HELD AS UNDER: - '3. THE COMMON GROUND RAISED BY THE DEPARTMENT IN THEIR APPEALS FOR THE ASSESSMENT YEARS 2002 - 03 TO 2007 - 08. ITA NO.4012 TO 4015/M/12 AND ITA NOS.4020 TO 4021/M/2012 ARE INTERLINKED AND DIRECTLY RELATED TO OUTCOME OF THE SECOND GROUND IN ASSESSEE'S APPEAL WHICH WE WILL SEE HEREIN AFTER. 4. THE FIRST COMMON GROUND IN ASSESSEE'S APPEAL READS AS UNDER: - 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN CONFIRMING THE REOPENING O F ASSESSMENT U/S. 147 OF THE ACT AS VALID MERELY ON GENERAL STATEMENT OF SHRI RAKESHKUMAR GUPTA THAT WAS MADE BY HIM IN THE COURSE OF SURVEY U/S 133A AT HIS PREMISES. THE - REOPENING OF ASSESSMENT IS BAD IN LAW AND NEEDS TO BE QUASHED.' 5. WE WILL FIRST PROCEED WITH GROUND NO,2 IN ASSESSEE'S APPEAL FOR ALT ASSESSMENT YEARS UNDER CONSIDERATION. 5.1 GROUND NO.2 IN ASSESSEE'S APPEAL FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION READS AS UNDER, EXPECT THAT, THE FIGURES MAY DIFFER IN EVERY ASSESSMENT YEAR U NDER CONSIDERATION. WE ARE TAKING THE GROUND FOR ASSESSMENT YEAR 2002 - 03. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN CONFIRMING ARBITRARILY THE ADDITION TO THE EXTENT OF RS.L,53.015/~ (ROUNDED OFF TO RS.1,54,000/ - ) BE ING 10% OF PURCHASES OF RS.15,30,150/ - HOLDING THAT THE ESTIMATE OF PROFIT @ 10% OF DISPUTED PURCHASES WILL BE FAIR AND REASONABLE TO COVER UP THE DIFFERENCE OF GP OF PURCHASES FROM SPECIFIC PARTIES AS WELL AS TO PLUG ANY LEAKAGE OF REVENUE. ADDITION IS CO NFIRMED ARBITRARILY IGNORING THE MERITS OF THE SUBMISSIONS AND IS BAD IN LAW AND THE SAME NEEDS TO BE DELETED.' 5.2 THE REVENUE'S GROUND WHICH IS DIRECTLY RELATED TO THE OUTCOME OF ASSESSEE'S APPEAL READS AS READS AS UNDER: - 'L. THE ID. CIT (A) HAS ERRED IN LAW AS WELL AS FACT BY NOT SUSTAINING ADDITION U/S. 69 AFTER HAVING ACCEPTED THE FINDING IN PRINCIPLE THAT THERE WAS INVOLVEMENT OF CASH TO HAVE PURCHASE MADE FROM UNDISCLOSED/UNVERIFIABLE PARTIES AND PURCHASES F OR THE CONCERNS OF SHRI RAKESH GUP TA AND FAMILY WAS ONLY ACCOMMODATION ENTRIES AND NOT BY ACTUAL PURCHASE. ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 31 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS FACT BY NOT SUSTAINING ANY ADDITION ON THE PEAK VALUE OF CASH INVOLVED IN MAKING PURCHASE FROM THE SO CALLED UNIDENTIFIABLE PARTIES U/S.69.' THE DEPARTMENT HAS ALSO RAISED AN ADDITION GROUND IN THEIR APPEALS FOR THE ASSESSMENT YEAR 200 - 03TO 2007 - 08 WHICH READS AS UNDER: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) AFTER HAVING ACCEPTED THE FACT THAT THE PURCHASE MADE FROM OR THROUGH SHRI RAKESH GUPTA AND HIS FAMILY MEMBERS ARE BOGUS, ERRED IN LAW IN NOT CONFIRMING THE ADDITION AT LEAST TO THE EXTENT OF PEAK OF THE PURCHASES MADE FROM SUCH PARTIES ON ACCOUNT OF BOGUS PURCHASES MADE IN CASH FROM THE OPEN MARKET OUT OF UN ACCOUNTED CASH IN VIEW OF THE DECISION HELD IN AHMEDABAD HON'BLE ITAT'S C - BENCH DECISION DECIDED IN TIRE CASE VIJAY PROTEINS LTD. VS ACIT58ITD 428.' BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE THE ASSESSEE IS ENGAGED IN THE TRADING OF TEXT ILE GOODS . DURING THE COURSE OF ASSESSMENT PROCEEDING THE A.O. OBSERVED THAT THE ASSESSEE HAS PURCHASED GOODS A.YS02 - 03 TO 07 - 08. INTERDICT, FROM CERTAIN CONCERNS BELONGING TO ONE SHRI RAKESHKUMAR GUPTA AND HIS FAMILY MEMBERS. AO FURTHER OBSERVED THAT THE DEPARTMENTS HAS SURVEYED THE BUSINESS PREMISES OF THE RAKESHKUNIAR GUPTA ON 13/02/2009. DURING THE COURSE OF SURVEY A STATEMENT OF SHRI RAKESHKUMAR GUPTA WAS RECORDED IN WHICH HE HAS STATED THAT HE HAS ISSUED BOGUS BILLS TO VARIOUS PARTIES AND WAS INVOL V ED IN ISSUING ACCOMMODATION BILLS. THE AO FURTHER OBSERVED THAT SHRI RAKESHKUMAR GUPTA LATER ON RETRACTED FROM HIS STATEMENT. THE ASSESSEE WAS ASKED TO JUSTIFY THE GENUINENESS OF PURCHASES MADE FROM MADE FROM SHRI RAKESHKUMAR GUPTA AND HIS FAMIL Y MEMBERS. THE ASSESSEE FILED A CONFIRMATION AND AN AFFIDAVIT OF SHRI RAKESHKUMAR GUPTA. THE ASSESSEE ALSO FILED COMPLETE DETAILS IN THE FORM OF INVOICE, CHALLANS, Q UANTITATIVE DETAILS OF GOODS. THE ASSESSING OFFICE DISCARDED ALL THESE EVIDENCES FILED BY ASSESSEE RELYING UPON THE STATEMENT OF SHRI RAKESHKUMAR GUPTA AND WENT ON TO MAKE AN ADDITION ON ACCOUNT OF ENTIRE AMOUNT OF PURCHASES MADE FROM SHRI RAKESHKUMAR GUPTA AND HIS FAMILY MEMBERS. THE ASSESSEE CARRIED THE MATTER BEFORE THE CI T(A) AND REITERATED WHAT HAD BEEN SUBMITTED BEFORE AO. AFTER CONSIDERING THE FACTS AND STATEMENT MADE BY ASSESSEE, THE CIT(A) RELIED UPON THE DECISION OF HIS PEERS IN RESPECT OF SOME OTHER PARTIES WHO HAVE ALSO MADE PURCHASES FROM THE CONCERNS OF SHRI RAKE SHKUMAR GUPTA AND HIS FAMILY MEMBERS AND TAKING A CLUE FROM THE ORDERS OF HIS PEERS HE SUSTAINED THE ADDITION TO THE EXTENT OF 10% AND DELETED THE REMAINING ADDITION MADE BY AO. THE COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT ONE OF THE ORDER S CONSIDERED BY THE CIT(A) WHILE DISPOSING THE APPEAL WAS IN THE CASE OF M/S. JEETENDRA HARSHADKUMAR TEXTILES. THE COUNSEL FURTHER SUBMITTED THAT ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 32 IN THAT CASE THE TRIBUNAL AND THE OCCASION TO CONSIDER THE VALIDITY OR OTHERWISE OF THE ADDITION MADE ON THE BASIS OF THE VERY SAME STAMEN OF SHRI RAKESHKUMAR GUPTA WHICH HAS BEEN RELIED UPON BY AO IN THE CASE OF THE ASSESSEE UNDER CONSIDERATION. THE COUNSEL SUBMITTED THE ORDER THE TRIBUNAL IN ITA NO.221 L/MUM/2011. IT IS THE SA Y COUNS EL THAT IN ALL THE APPEALS UNDER CONSIDERATION FACTS AND ISSUES ARE IDENTICAL AND, THEREFORE, THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. JEETENDRA HARSHADKUNIAR TEXTILES DESERVED TO BE FOLLOWED. 6.1 THE ID. DR COULD NOT BRING NOT BRING ANY DISTINGUI SHING FACTS OR DECISION PER THE DR AGREED THAT FACTS AND 'ISSUES ARE IDENTICAL WITH THE FACTS AND ISSUES IN THE CASE OF M/S. JEETENDRM JARSHADKUMAR TEXTILES. 7. WE HAVE PERUSED THE ASSESSMENT ORDER AND THE ORDER OF CIT(A). WE HAVE ALSO PERUSED ORDER OF T HE TRIBUNAL MUMBAI 'I' BENCH IN THE CASE OF M/S. JEETENDRA HARSHADKUMAR TEXTILES IN ITA N.771 AND 2211/MUM/2011 FOR ASSESSMENT YEAR 2007 - 08 DATED 21/11/2012. WE FIND FORCE IN THE CONTENTIONS OF THE COUNSEL THAT THE FACTS AND CIRCUMSTANCES ARE IDENTICAL TH OUGH THE FIGURES MAY DIFFER. THE TRIBUNAL HAD GIVEN ITS FINDING AT PARA - 8 ON PAGE - 5 OF ITS ORDER WHICH READS AS UNDER: - 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION IN THE LIGHT MATERIAL PLACED BEFORE US IT WILL BE RELEVANT TO REPRODUCE THE LETTER RECEIVED BY THE AO FROM SHRI RAKESH KUMAR GUPTA, WHICH IS ALSO REPRODUCED IN THE ASSESSMENT ORDER. '1 AM IN RECEIPT OF YOUR SUMMONS U/S 131 OF THE L.T. ACT 1961 IN THE CASE OF M/S. JINTENDRA HARSHAD KUMAR TEXTILES PVT. LTD. ASKING ME TO ATTEND BEFOR E YOUR GOODSELF WITH THE DETAILS OF MY ACCOUNT WITH THE SAID M/S. JITENDRA HARSHAD TEXTILES PVT. LTD. AS YOU ARE AWARE THAT MY ASSESSING OFFICER HAD RECORDED ALLEGED STATEMENT U/S 133A AND 131 OF THE I.T. ACT.1961 1 HAVE BEEN RECEIVING WITNESS SUMMONS FRO M ALL FOUR CORNER OF THE CITY ON THE GROUND THAT I HAVE GIVEN ACCOMMODATION BILL THROUGH I HAVE DENIED THE CONTENT OF THE STATEMENTS RECORDED BY A.O. U/S 133A & 131 VIDE MY LETTER DATE 27/04/2009 AND MY AFFIDAVIT DATED 20/02/2009 SUBMITTED TO WARD 14(3)(2) . IT IS PHYSICALLY IMPOSSIBLE FOR ME TO ATTEND BEFORE VARIOUS INCOME TAX AUTHORITIES, AS I AM NOT FEELING WELL, IT WILL NOT POSSIBLE FOR ME TO ATTEND BEFORE YOUR GOODSELF IN RESPONSE TO YOUR ABOVE MENTIONED SUMMONS. AS REGARDS M/S. JITENDRA HARSHAD KUMAR TEXTILES PVT LTD IS CONCERNED. 1 HAVE ALREADY GIVEN MY AFFIDAVIT WHEREIN I HAVE SPECIFICALLY STATED THAT I HAVE SOLD THE GOOD TO M/S. JITENDRA HARSHAD KUMAR TEXTILES PVT. LTD AND THE CONSIDERATION IS RECEIVED TO ME BY CROSS ORDER CHEQUE. COPY OF THE SAI D LEDGER ACCOUNT IS ALREADY SUBMITTED THE DEPARTMENT.' ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 33 8.1 FROM THE ABOVE LETTER IT IS CLEAR THAT THE SAME WAS WRITTEN IN RESPONSE TO NOTICE ISSUED BY THE AO. NOT ONLY SHRI RAKESH KUMAR GUPTA HAS SLATED HE HAS RETRACTED FROM THE STATEMENT RECORDED DURING THE SURVEY BUT ALSO FILED AN AFFIDAVIT DATE 20/02/2009 AND LETTER DATED 27/04/2009 TO DENY THE STATEMENT MADE DURING THE SURVEY UNDER SECTION 1 33 A HE HAS FURTHER CONFIRMED THAT THE SALES MADE BY THE ASSESSEE WERE EFFECTED AND THE CONSIDERATION WAS RECEIV ED BY CROSS ORDER CHEQUES. THUS IT IS CLEAR THAT THERE IS NO MATERIAL ON RECORD TO SAY THAT THE PURCHASE MADE BY THE ASSESSES FROM THE SAID CONCERN WERE BOGUS EXCEPT THE GENERAL STATEMENT RECORDER BY THE DEPARTMENT IN THE CASE OF SHRI RAKESH KUMAR GUPTA, W HICH WAS LATE IN RETRACTED. IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD AGAINST THE SUBMISSION MADE BY SHRI RAKESH KUMAR GUPTA IN HIS LETTER DATED 20/12/2009 FILED BEFORE THE AO OF TH E ASSESSEE. IF ANY, MADE IN THE CASE THE ASSESSEE WILL BE BASED ON PRESU MPTION ONLY AND IT CANNOT BE SUSTAINED IN THE EYES OF LAW. AS AGAINST THAT ASSESSEE HAS SUBMITTED VARIOUS EVIDENCES TO SHOW THAT THE ACTUAL DELIVERY OF THE GOODS WAS RECEIVED BY THE ASSESSEE FROM THE SAID PARTY WHICH HAS NOT BEEN DISCARDED BY THE AO. THE A DDITION SUSTAINED BY LD.C I T(A) IS ALSO ON PRESUMPTION BASIS. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCE OF THE CASE, WE ARE OF THE OPINION THAT ADDITIONS MADE BY THE AO DESERVES TO BE DELETED IN ITS ENTIRETY. WE DECIDE ACCORDINGLY.' 9.1. ON IDE NTICAL FACTS, AND ISSUES, THIS BENCH HAS DECIDED THE APPEAL IN THE CASE OF M/S. C. CHOTALAL & CO. IN ITA NOS. ITA NO.3960 TO 3967/MUM/2012 FOR ASSESSMENT YEARS 2002 - 03 TO 2009 - 10 DATED 24/09/13 WHEREIN ONE US (THE ACCOUNTANT MEMBER) IS A PARTY TO THE SAID DECISION. SINCE THE FACTS AND ISSUED BEING IDENTICAL, WE HAVE NO ]IESITATION IN FOLLOWING THE ORDER OF OUR CO - ORDINATE BEACH RESPECTFULLY FOLLOWING THE SAME ALL THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED AND ALL THE APPEALS FILED BY THE REVENUE A RE ACCORDINGLY DISMISSED. 9.2. AS WE HAVE DECIDED THE APPEAL ON MERITS OF THE CASE, WE DO NOT FIND IT NECESSARY TO DECIDE COMMON GROUND NO. 1 RAISED BY THE ASSESSEE FOR ALT THE YEARS UNDER CONSIDERATION AS IT IS ONLY OF ACADEMIC INTEREST.' (VIII) THE HON 'BLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. NIKUNJEXIMP ENTERPRISES P. LTD., AS REPORTED IN (2015) 372 ITR 619(BOM) ON SIMILAR ISSUE OF BOGUS PURCHASES, HAVE ALSO DELETED THE ADDITIONS MADE BY THE AO ON ACCOUNT OF SO - CALLED BOGUS PURCHASES AND HELD AS UNDER: '2. THE FOLLOWING QUESTION OF LAW HAS BEEN FORMULATED FOR CONSIDERATION OF THIS COURT. WHET HER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW THE TRIBUNAL WAS RIGHT IN DELETING THE A DDITION MADE BY THE ASSESSING OFFICER OF RS.1,33,41,917/ - TOWARDS BOGUS PURCHASES EVEN THROUGH THE ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 34 SUPPLIERS WERE NON - EXISTENT AND ONE OF THE PARTIES HAD CATEGORICALLY DENIED HAVING ANY BUSINESS DEALINGS WITH THE ASSESSES COMPANY' 3. THE RESPONDENT - ASSESSES HAD FILED ITS RETURN OF INCOME OF TH E ASSESSMENT YEAR 2001 - 02 DECLARING A TOTAL INCOME OF RS.42.08 IOCS. THE ASSESSING OFFICER INTER - ALIA DISALLOWED AN EXPENDITURE OFRS.L.33CRORES ON ACCOUNT OF NON - GENUINE PURCHASE FROM 7 PARTIES ALONGWITH OTHER DISALLOWANCE. THE ASSESSING OFFICER BY ORDER D ATED 25/03/2004 ASSESSED THE RESPONDENT - ASSESSEE TO AN INCOME OR RS.L.87CRORES. 4. BEING AGGRIEVED AN APPEAL WAS FILED BY THE RESPONDENT - ASSESSEE WITH THE COMMISSIONER OF INCOME - TAX (APPEALS) ('CIT(A)'). BY AN ORDER DATED 19/04/2004, THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER INTERALIA TO THE EXTENT RS.1.33 CRORES DISALLOWED AS BOGUS PURCHASES. 5. BEING AGGRIEVED BY THE ORDER DATED 19/08/2004 OF THE CIT(A), THE RESPONDENT - ASSESSEE PREFERRED AN APPEAL TO THE TRIBUNAL. THE TRIBUNAL IN THE IMPUGNED ORDER DATED 30/04/2020 ' WHILE ALLOWING THE APPEAL RECORD THAT THE RESPONDENT - ASSESSEE HAD FILED LETTERS OF CONFIRMATION OF SUPPLIERS, COPIES OF BANK STATEMENT SHOWING ENTRIES OF P AYMENT THROUGH ACCOUNT PAYEE CHE QUES TO THE SUPPLIERS, COPIES OF INVOICE FO R PURCH ASES AND STOCK STATEMENT I.E. STOCK RECONCILIATION STATEMENT. THIS RECONCILIATION STATEMENT GAVE COMPLETE DETAILS WITH REGARDS TO OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK AND NO FAULT WITH REGARDS TO IT WAS FOUND. BESIDES, SUBSTANTIAL AMOUN T OF SALES MADE BY THE RESPONDENT - ASSESSEE WAS TO GOVERNMENT DEPARTMENT I.E. DEFENCE RESEARCH AND DEVELOPMENT LABORATORY, HYDERABAD AND SUCH SALES COULD NOT BE BOGUS. BESIDES THE BOOKS OF ACCOUNT OF THE RESPONDENT - ASSESSEE HAVE NOT BEEN REJECTED. IN VIEW O F THE ABOVE, BY ORDER DATED 30/04/2010 THE TRIBUNAL DELETED THE DISALLOWANCE OF RS.L.33CRORES BY HOLDING THAT THE PURCH A SES WERE NOT BOGUS. 6. MR. VIMAL GUPTA. SENIOR COUNSEL APPEARING IN SUPPORT OF THE APPEAL SUBMITS THAT THE TRIBUNAL COULD NOT HAVE RELI ED ONLY RELIED UPON THE STOCK STATEMENT I.E. THE RECONCILIATION STATEMENT TO CONCLUDE THAT THE PURCHASES WERE GENUINE. THEREFORE, HE SUBMITS THAT THE QUESTION FOR M UL ATED IS A SUBSTANTIAL QUESTION OF LAW AND NEEDS TO BE DECIDED BY THIS COURT. 7. WE HAVE CO NSIDERED THE SUBMISSION ON BEHALF OF THE REVENUE. HOWEVER, FROM THE ORDER OF T H E TRIBUNAL DATED 30/04/2010, WE FIND THAT THE TRIBUNAL HAS DELETED THE ADDITIONS ON NOT ONLY ON THE BASIS OF STOCK STATEMENT I.E. RECONCILIATION STATEMENT, BUT ALSO IN VIEW OF T HE OTHER FACTS. THE TRIBUNAL RECORDS THAT THE BOOKS OF ACCOUNTS OF THE RESPONDENT - ASSESSEE HAVE NOT BEEN REJECTED. SIMILARLY, THE SALES HAVE RIOT BEEN DOUBTED AND IT IS AN ADMITTED POSITION THAT SUBSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE GOVERNMENT DEPARTMENT I.E DEFENCE ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 35 RESEARCH AND DEVELOPMENT LABORATORY, HYDERABAD. FURTHER, THERE WERE CONFIRMATION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANKS STATEMENT ALL OF WHICH WOULD INDICATE THAT THE PURCHASES WERE IN/ACT MADE. IN OUR VIEW, MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER OR THE CIT(A), ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT - ASSESSEE. THE ASSESSING OFFICER AS WELL AS CIT(A) HAVE DISALL OWED THE DEDUCTION OFRS.1.33 CRORES ON ACCOUNT OF PURCHASES MERELY ON THE BASIS OF SUSPICION BECAUSE THE SELLER AND THE CANVASSING AGENTS HAVE NOT BEN PRODUCED BEFORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WELL A REASONED ORDER TAKING INTO ACCOUNT ALL THE FACTS BEFORE CONCLUDING THAT THE PURCHASE OF RS.1.33 CRORES WAS NOT BOGUS. NO FAULT CAN BE FOUND WITH THE ORDER DATED 30/04/2010 OF THE TRIBUNAL. 9. IN VIEW OF TH E ABOVE, WE FIND THAT QUESTION AS FORMULATED IS NOT A SUBSTANTIAL QUESTION OF LAW. THERE FORE THE APPEAL IS DISMISSED NO ORDER AS TO COSTS.' 6.3.16. IT IS WELL SETTLED THAT NO DISALLOWANCE CAN BE MADE AS A LEAP IN THE DARK. THE AO IS NOT ENTITLED TO MAKE A GUESS WITHOUT EVIDENCE. THE ASSESSMENT OF ANY PARTICULAR YEAR CANNOT BE BASED ON MERE S USPICION OR BARE GUESS, BUT ON A LEGITIMATE MATERIAL FROM WHICH A REASONABLE INFERENCE OF ANY EXPENDITURE BEING OF THE DISALLOWABLE NATURE COULD BE DRAWN AND THAT THE INITIAL BURDEN OF FINDING SUCH MATERIAL IS ON THE AO AS HELD BY HON'BLE HIGH COURT ORISSA IN THE CASE OF BANSIDHAR ONKARMALL VS. CIT (1953) 23 ITR 353(ORI$SA) WHERE IT OBSERVED AS UNDER : - THERE WAS NO DOUBT THAT THE VIEW TAKEN BY THE INCOME - TAX AUTHORITIES BASES ON THE ALLEGED PRESUMPTION WAS ERRONEOUS IN LAW. 'PAST HISTORY' MAY BE LEGITIMA TE MATERIAL, BUT THAT IS NOT SUFFICIENT BY ITSELF WITHOUT MORE, TO JUSTIFY ASSESSMENT IN A PARTICULAR YEAR. THERE MUST BE SOME MATERIAL RELATABLE TO THE ACCOUNTING YEAR WHICH TAKEN WITH THE 'PAST HISTORY' MAY REASONABLY ENTITLE THE INCOME - TAX AUTHORITIES T O HOLD THAT THERE MUST IN FACT HAVE BEEN SOME CONCEALED INCOME DURING THE ACCOUNTINGS/EAR MID WHICH IS LIABLE TO ASSESSMENT. TO BASE AN ASSESSMENT BARELY ON A PRESUMPTION RELATING TO CAPITAL FOUND TO EXIST IN SOME PREVIOUS YE AR APPEARED TO B E UNWARRANTE D. THE INCOME - TAX AUTHORITIES PROCEEDED ON THE VIEW THAT THE BURDEN OF PROOF WAS ON THE ASSESSES TO SHOW THAT THE 'PAST CAPITAL' HAS DISAPPEARED, FOR WHICH THERE WAS NO JUSTIFICATION, AND NO AUTHORITIES HAS BEEN SHOWN. IT IS WELL THE ASSESSMENT OF ANY PART ICULAR YEAR MUST BE BASED NOT ON MERE SUSPICION OR BARE GUESS, BUT ON LEGITIMATE MATERIAL FROM WHICH A REASONABLE INFERENCE OF INCOME HAVING BEEN EARNED DURING THE ACCOUNTING YEAR IN QUESTION COULD BE DRAWN, AND THAT THE INITIAL BURDEN OF FINDING SUCH MATE RIAL, HOWEVER SLIGHT, WAS ON THE INCOME - TAX ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 36 AUTHORITIES AND NOT ON THE ASSESSEE. THE FACTS BEFORE THE INCOME - TAX AUTHORITIES WERE NOT SUFFICIENT TO SHIFT THE BURDEN OF PROOF ON TO THE ASSESSEE, THERE FACTS DID NOT NECESSARILY JUSTIFY ANY PRIMA FACIA INFERE NCE THAT THE PAST CAPITAL PRODUCED INCOME DURING THE ACCOUNTING YEAR. BEFORE SUCH AN INFERENCE COULD BE DRAWN, SOME FOUNDATION MUST BE LAID FOR THE ASSUMPTION THAT THERE WAS INCOME FROM SUCH CAPITAL DURING THE ACCOUNTING YEAR. THEREFORE, ON THE FACTS AND I N THE CIRCUMSTANCE OF THE CASE, THE TRIBUNAL ERRED ON CONFIRMING THE ADDITIONS OF AMOUNTS IN QUESTION.' THE AO HAS, IN THE CASE OF THE APPELLANT, MADE DISALLOWANCE WITHOUT ANY SUBSTANTIAL AND IRREFUTABLE MATERIAL; SUCH DISALLOWANCE / ADDITION, THEREFORE, CANNOT BE SUSTAINED IN THE EYES OF LAW. 6.3.17. THUS, KEEPING IN VIEW THE PRESENT FACTS OF THE CASE AND APPLYING THE RATIO OF THE DECISION OF HON'BLE JURISDICTIONAL ITAT OF MUMBAI AS WELL AS JURISDICTIONAL HIGH COURT OF MUMBAI WHERE VARIOUS LEGAL ISSUES A RISING OUT OF ADDITIONS OF SIMILAR NATURE HAVE BEEN THREAD - BARE DISCUSSED AND ALSO OTHER DECISION OF HON'BLE ITAT/HIGH COURTS/SUPREME COURT, IT WILL BE DIFFICULT TO SUSTAIN THE ADDITIONS MADE BY THE AO ONLY ON THE GROUND THAT THE SUPPLIERS OF THE MATERIALS /GOODS WERE DEFAULTERS IN NOT PAYING VAT TO THE SALES - TAX DEPARTMENT OF MAHARASHTRA OR THE SUSPICIOUS DEALERS WERE NOT PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. THE CLAIM OF THE APPELLANT IS THAT THEY HAVE MADE THE ENTIRE PAYMENT THROUGH BA NKING CHANNEL. IN FACT, WHEN THE APPELLANT WAS DIRECTED, THEY HAVE PRODUCED CHART OF SUCH PAYMENT THROUGH BANKING CHANNEL. FURTHER, THE AO HAS FAILED TO SUBSTANTIATE THAT THE ASSESSEE MADE PAYMENT THROUGH BANKING CHANNEL AND RECEIVED IT BACK IN CASH. IF THE SUPPLIERS HAVE NOT PAID VAT CHARGES TO/THE GOVT. OF MAHARASHTRA, BUT TAKEN THE SAME FROM THE PURCHASERS (HERE ASSESSEEN'SU.CH DIFFERENTIAL AMOUNT NEEDS TO BE ADDED IN THE HANDS OF DEALER AND THEY ARE LIABLE FOR ANY ACTION BY THE GOVT. OF MAHARASHTRA FO R THEIR SUCH DEFAULTS. UNDER THE INCOME TAX ACT, 1961 WHAT CAN BE TAXED, IS THE REAL INCOME. EVEN THROUGH THE TRANSACTION IS NOT VERIFIABLE, IT IS THE INCOME COMPONENT AND NOT THE ENTIRE TRANSACTION AMOUNT, WHICH CAN BE TAXED. I FURTHER FIND THAT IN MANY SUCH CASES, THE ADDITIONS ARE MADE BASED ON THE GP/NP RATIO WHEREVER THERE IS ANY ABNORMAL FALL IN GP/NP RATIO DURING SUCH ASSESSMENT YEAR WHEN SUCH ALLEGATIONS COMES TO HIS/HER NOTICE AND NO SATISFACTORY REPLIES ARE PROVIDED, BY THE ASSESSEE TO THE AO, IF THEY ARE ASKED SUBSTANTIATE THE SAME BY THE AO HENCE, THE ADDITION OF PURCHASES AS REFERRED AS REFERRED ABOVE CANNOT BE MADE IN THE PRESENT CASE, IN THE MANNER AS IT HAS BEEN MADE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT EX PLAINED THAT GP/NP RATIO OF EARLIER ASSESSMENT YEARS FOR COMPARISON AND TO CHECK ANY PROBABLE AND POSSIBLE LEAKAGE OF REVENUE ARISING OUT ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 37 OF SUCH ALLEGATION. THE SAME HAS BEEN CONSIDERED AND EXAMINED. I HAVE FURTHER COMPARED THE GP RATIO OF THE PRESENT FIN ANCIAL YEAR AFTER TAKING INTO CONSIDERATION THE ADDITIONS MADE BY THE AO AND FIND THAT THE SAME WILL LEAD TO A VERY HIGH GP RATIO WHICH MAY NOT BE POSSIBLE IN THE BUSINESS ACTIVITY IN WHICH THE ASSESSEE IS ENGAGED. THEREFORE, IT IS BETTER TO CHECK THE GP R ATIO OF EARLIER ASSESSMENT YEARS OF THIS ASSESSEE SO AS TO EXPLORE THE POSSIBILITY THAT WHETHER THE APPELLANT HAD REFLECTED ANY LOWER GP RATIO IN THE PRESENT FINANCIAL YEAR UNDER APPEAL WHICH CAN BE TERMED AS ABNORMAL DEVIATION FROM THE PAST GP RATIO RESUL TS. IN THE PRESENT CASE THE APPELLANT DURING THE APPELLANT PROCEEDING HAS SUBMITTED THE STATEMENT OF GROSS PROFIT FOR LAST 3 YEAR, WHICH IS AS UNDER : A.Y. G.P. RATIO 2007 - 08 2.41 2008 - 09 2.52 2009 - 10 4.59 ON PERUSAL OF THE G,P. CHART FOR LAST 3 YEAR, IT IS SEEN THAT THE APPELLANT HAS SHOWN THE HIGHER G.P. DURING - THE YEAR UNDER APPEAL AS COMPARE TO THE LAST 3 YEAR. IN NUTSHELL THE APPELLANT HAS NOT UNDERSTATEMENT INCOME DURING THE YEAR UNDER APPEAL. KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTA NCES OF THE CASE AS WELL AS VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE DECISION OF JURISDICTIONAL I TAT AS WELL AS HIGH COURT OF MUMBAI WHICH ARE BINDING, I FEEL THAT THE ADDITION MADE BY THE AO FOR THE REASONS STATED IN THE ASSESSMENT ORDER CANNOT BE SU STAINED. ACCORDINGLY, THE ADDITION OF AMOUNT OF RS.2,16,32,006/ - IS DIRECTED TO BE DELETED. 8. AGAINST THE ABOVE ORDER OF CIT(A), REVENUE IS IN FURTHER APPEAL BEFORE US. 9. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT AO HAS MADE ADDITION ON THE BASIS OF INFORMATION BY THE SALES TAX DEPARTMENT WITH RESPECT TO THE PURCHASES MADE BY ASSESSEE FROM VARIOUS PARTIES. AO FOUND THAT OUT OF ENTIRE SUPPLIES, GOODS PURCHASED FROM FIVE P ARTIES HAD ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 38 NOT PAID VAT COLLECTED ON THE SALES MADE TO THE ASSESSEE. ACCORDINGLY, HE ADDED PURCHASE AMOUNT IN THE INCOME OF THE ASSESSEE. TO SUBSTANTIATE THE GENUINENESS OF PURCHASES, ASSESSEE FILED VARIOUS DOCUMENTS BEFORE THE AO. AO DID NOT AGREE WITH TH E SAME BY OBSERVING THAT VAT AUTHORITIES HAVE TREATED SALES AS NON - GENUINE ONE. IN AN APPEAL FILED BEFORE THE CIT(A), HE OBSERVED THAT ADDITION WAS MADE ONLY ON THE BASIS OF INFORMATION FROM INVESTIGATION WING VIS - - VIS SALES TAX DEPARTMENT. HE FURTHER OBS ERVED THAT THE ASSESSEE HAS REQUESTED THE AO TO GIVE THEM COPIES OF ALL THE MATERIALS/ INFORMATION/ EVIDENCES, ON THE BASIS OF WHICH AO HAS FORMED HIS OPINION TO MAKE DISALLOWANCE OF SUCH REFERRED PURCHASES. NO SUCH MATERIALS WERE SUPPLIED TO THE ASSESSEE BEFORE USING THE SAME AGAINST IT. THE CIT(A) FURTHER OBSERVED THAT NO INFIRMITY HAS BEEN POINTED OUT IN THE DOCUMENTS SUBMITTED BY THE ASSESSEE. AS PER CIT(A) AO ALSO HAS NOT GIVEN ASSESSEE OPPORTUNITY TO CROSS EXAMINE THE SAID PARTIES AND COUNTERING THE CONCLUSIONS OF SALES TAX DEPARTMENT WHICH HAS LED TO THE VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THE CIT(A) OBSERVED THAT ASSESSEE HAS PRODUCED THE PROOF OF SUCH PAYMENT THROUGH BANKING CHANNEL BUT THE AO HAS FAILED TO SUBSTANTIATE THAT THE ASSESSEE REC EIVED IT BACK IN CASH. DURING THE YEAR THE GP WAS HIGHER AS COMPARED TO THE LAST THREE YEARS WHICH CLEARLY INDICATES THAT THE CURRENT YEAR INCOME IS NOT UNDERSTATED. AS PER CIT(A) IF THE SUPPLIERS HAVE NOT PAID VAT CHARGES TO THE GOVT. BUT TAKEN THE SAME FROM THE PURCHASES, SUCH DIFFERENTIAL AMOUNTS NEED TO BE ADDED IN THE HANDS OF DEALER AND THEY ARE LIABLE FOR ANY ACTION FOR THEIR DEFAULTS. ITA NO.3628/MUM/2 017 M/S. SUNRISE METALLIC (INDIA) PVT. LTD., 39 10. THE CIT(A) ALSO STATED THAT THE ASSESSEE ON ITS PART HAS SUBMITTED PURCHASE INVOICE, STOCK MOVEMENT RECORDS, VA T REGISTRATION NUMBER, LEDGER ACCOUNT, BANK STATEMENT REFLECTING ENTRIES MADE TO THE SAID PARTIES AGAINST THE PURCHASES FROM IT ETC., HOWEVER, NO FAULT HAS BEEN FOUND IN ALL THESE DOCUMENTS BY THE AO. THEREAFTER CIT(A) RECORDED DETAILED FINDING FROM PARA 6 .3.2. TO 6.3.16, WHICH HAS NOT BEEN CONTROVERTED BY LEARNED DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. WE ALSO FOUND THAT GP RATE OF THE ASSESSEE DURING THE YEAR HAS DOUBLED AS COMPARED TO THE EARLIER YEAR. ACCORDINGLY, WE DO NOT FIND ANY REASON TO IN TERFERE IN THE FINDING SO RECORDED BY CIT(A) RESULTING INTO DELETION OF ADDITION MADE ON ACCOUNT OF PURCHASES MADE FROM SUSPICION PARTIES. 11. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 23 / 03 /2 01 8 SD / - ( SANDEEP GOSAIN ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 23 / 03 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//
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